One of the first concepts that really caught my interest when I was taught the principles of what we now call Uncommon Banking was the concept of the junk drawer. We all have one, right? That drawer in the kitchen or a desk that has all the stuff that really has no other place. The stuff that you may only need once or twice a year, but when you need it, you know where to find it.
Many of us create a financial junk drawer over time and without even realizing it. Between the banks, the investment firms, and the insurance companies all vying for our money, things just start to collect in that financial junk drawer.
This will probably sound familiar: You get out of college or get into a trade, start a business and a family and you need certain things. You get a bank account and then the banker tries to add a higher-interest savings account. Then you get your first family car and are talked into a loan stretched out over 5 years. Your insurance agent adds that car to your policy for the family. Then you get talked into an umbrella policy to protect you if something goes wrong.
You start having children, and those kids aren’t going to stay little forever. You need college savings accounts, you have a 401K at work. You start accumulating credit cards. You pick up a life insurance policy. A friend or brother gets into the investment business and has some ideas for outside your retirement plan. All of a sudden, it’s 10 years later and you literally are juggling over 20 different financial accounts or products. That’s your financial junk drawer.
Then one day you look at your bank statements and think, “It seems like we should have more money than this by now.”
A Shotgun or a Rifle
Approaches to building wealth are a lot like approaches to hunting. You can shoot small things with a shotgun or you can shoot big things with a high-powered rifle. We at Uncommon Wealth do a great job of listening, hearing and making connections with those big things you want to accomplish. These are not bucket list items but big goals you want to accomplish in the next few years.
The people we meet and attract are those who are doing what they love or have the vision to do what they love but aren’t sure how to get there in the quickest way possible.
In our experience, it’s because your cash-flow is acting like a shotgun instead of a rifle. You have been marketed to and tricked into putting your money into that junk drawer of 20 different things that don’t necessarily help you build wealth quickly.
Building wealth is about getting your money to do multiple things at the same time:
- Real estate that produces rent, capital appreciation, and tax benefits.
- Cash-Value Whole Life Insurance that pays dividends like rent, grows with compound interest as you pay your premium, defers any tax because it is protected, and gives you a death benefit. You do not need a separate term life insurance policy in most cases
- Building a business that produces income, appreciates in value and can be sold later and also provides tax deductions and the ability to expense things that help grow the business.
Combining these three wealth-building tools into one instrument is incredibly powerful and that is what we teach our clients.
In helping clients move away from a shotgun approach to wealth building, we clearly help you identify your goals and then identify where your money is going. Is what you spend and fund working in the same direction as your goals? Often, goals and where money is being spent are pulling in opposite directions.
Take John and Sally. They have some big goals. They want to pay off their house, buy another house that they would rent out and use that income to travel more and see the world. They have some money in savings, but their conventional wisdom and common influence have taught them to max out their retirement funds at a very young age. So, most of their disposable and investable income goes into retirement plans they can’t touch for decades.
The Simplest Answer is Usually the Best
What we teach people is to focus your financial goals into 3-5 year blocks. What do you want to accomplish in the next 3-5 years? Rather than diverting funds into retirement accounts, you can’t touch for many years or those other 20 accounts in the junk drawer, a cash value life insurance policy will create a simple instrument that is flowing in the same direction as your goals.
Our clients report that this makes so much sense and that this system is incredibly simple because they are only putting their money in one place and not tracking 5-10 other contributions and accounts all the time.
You learn things from starting your own AIRBNB. You learn from starting your own business or blog and pouring into what excites you. When your capital is not supporting your dreams in the here and now, accomplishing those big dreams is that much more difficult. If you want to accomplish something big, you need a high-powered rifle.
If you need help focusing that scope of cash-flow and your finances to buy that building, build that business or start that passion project, we are here for you and believe you can get it. You can do the thing. If you want to know how, please don’t hesitate to contact us. To understand Uncommon Banking in greater detail this article is a good place to start.