Strategy · Whitepaper
By Mark Norris, BBA · EA
You have financial goals and you work hard to make them happen. Having the right system — and understanding your money cycle — is what turns effort into outcomes.
The money cycle
Accumulation
Your working years — income coming in, skills compounding.
Preservation
Saving a steady percentage and moving a nest egg into lower-risk investments.
Distribution
Drawing on the nest egg for retirement income.
It's not how much money you make — it's how much you get to keep that counts.
The accounting equation
Net Worth = Assets − Liabilities
How much you own minus how much you owe. Net worth is the measure of wealth — and the reason a good accountant belongs on your team. A good accountant does more than taxes; accounting is the money-management system that gives you the information to make wise financial decisions.
The pillars
None of these are complicated. They're meant to stack — build pillar 1, then 2, then 3, with each one strengthening the next.
Pillar 01
Invest in your career and your family's careers — it's the engine of your financial success. Make sure your income-tax withholdings are correct and updated as things change.
Related: Income Strategies to Build Wealth.
Pillar 02
Keep your bills and payments less than your take-home pay and save the difference. Use the savings to fund short-term, mid-term, and retirement goals.
Pillar 03
Six times your monthly expense is a sturdy buffer for a rough spot. Keep a credit card for true emergencies — but don't carry it. Leave it at home so a short-cash week doesn't tempt you into debt.
Do without until payday.
Pillar 04
First your 401(k) at work (pre-tax). Then a Traditional IRA (tax-deductible). Last, mutual funds / stocks / bonds (no tax advantage).
Pair it with a term-life insurance policy to cover final expenses until your savings are substantial. Over a working life, savings can compound into millions.
Pillar 05
If you're smart, you don't need it — and if you're not, you have no business with it. If you don't have the money now, you probably won't have it in 30 days to pay it back.
Pay down high-interest credit cards and personal loans as fast as possible — forgo saving while you do. Your savings won't earn what you're paying out in interest. A missed or late payment lands as a derogatory mark on your credit report.
No one goes broke if they don't owe money. Save and pay cash.
Pillar 06
They only want to beat you out of your money. If it sounds too good to be true, it usually is. Google people, companies, and offers for alerts or warnings before handing anything over.
Pillar 07
Good credit makes big purchases possible — a car, a house. Check your credit score at least once a year, free, at annualcreditreport.com.
If information on your report is incorrect, write the company that supplied it and the credit reporting agency to challenge it. Incorrect information must be removed within 30 days if it can't be substantiated.
In closing
Throughout your life you'll make financial decisions. Using this website will enhance your financial success. Good luck.
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