Personal Economic Model®
The Tax Filter Washington's influence on future tax changes.
As you look at the center of the picture of the Personal Economic Model® you will notice that the Tax Filter takes center stage. Every dollar you earn must flow through the tax filter. Some dollars flow through the tax filter from your current income cash flow and taxes are paid today leaving you after tax dollars to save, invest, or spend. While other dollars have deferred taxes today through qualified plan contributions but must one day pass through the tax filter upon withdrawal.
Lifestyle Regulator Regulates the flow of money between your Current Lifestyle and your Future Lifestyle.
The Lifestyle Regulator plays a very important role in your financial future. As you look at the Personal Economic Model® you will notice that it sits right behind the Tax Filter and regulates the flow of money between your Future Lifestyle and your Current Lifestyle.
The Lifestyle Regulator regulates how much money you pump up the Future Retirement tube into your Savings and Investment accounts and how much you allow to flow into your Current Lifestyle.
It is important to notice that every dollar not Saved or Invested continues to flow through the Regulator and on to your Current Lifestyle. Lifestyle money is money spent, and lost forever.
The War Between Your Current Lifestyle and Your Future Lifestyle
WARNING: It is easy to get lulled into thinking that you have plenty of time on your side to put your “Future Lifestyle” concerns in order.
Toughest Financial Questions For people serious about their financial future.
If you are serious about your financial future you need to know the answer to these four financial questions:
1: Do you know what rate of return you have to earn on your savings and investment dollars to be able to retire at your current standard of living adjusted for inflation and have your money last through your life expectancy? Do you want to know?
2: Do you know how much you need to save on a monthly or annual basis to be able to retire at your current standard of living and have your money last through life expectancy? Do you want to know?
3: Do you know, with what you are currently saving, how long you will have to work to be able to retire and live just like you live today through life expectancy? Do you want to know?
4: Do you know, if you do not do anything different than you are doing now, how much you will have to reduce your standard of living at retirement for your money to last through your life expectancy? Do you want to know?
Can you meet with me for about 15 minutes? I will be able to answer those questions for you and you will be able to determine if I’ll be able to help you, and if what I do is what you are looking for. Do you have 15 minutes so I can give you the answer to those questions?
Balanced Financial Approach
A balanced position is one in which you are putting enough money away in your Savings and Investment tanks today so that you will be able to draw from these accounts during your retirement years and have enough money to live like you are living now adjusted for inflation.
The power of compound interest on your Savings and Investment dollars over time can help you achieve the dollars you will need to offset the increased cash flow that will be required to maintain your present standard of living at retirement.
Financial Warning Signs Avoiding damage to future lifestyle.
Do you have enough income cash flow to support your monthly payments from your Current Lifestyle without reducing your Future Lifestyle savings?
Warning: If you have to borrow from your Future Lifestyle for a Current Lifestyle expense you could be heading for trouble.
Three Different Strategies Debtor - Saver - Wealth Creator.
The Debtor is someone who works to spend. They basically spend everything they make and it takes everything they make to live.
The Saver is someone who pays cash for their purchases to avoid paying interest. They understand that if they pay interest their purchase will cost them even more and they are willing to postpone gratification long enough to save for their purchase.
The Wealth Creator has a balanced cash flow position meaning that their current lifestyle is not out of balance with the Savings required to support their Future Lifestyle. They are saving enough for their future to enable them to retire at the same standard of living they are enjoying today.
How you pay for things along the way can have a big impact on how much money you have down the road.