Eric Alexander recognized that the financial strategies most families were taught centered on defense and asking the oft-repeated question: “How much do we need?”, rather than asking the right question: “How can I be the best steward of my resources?” This led to the creation of what Eric calls the “Hierarchy of Wealth” model based on three tenets: a strong foundation of protection and flexibility; a core centered on maximizing income streams, rather than just net worth; and a launchpad to strategically explore opportunities in real estate, businesses, and other markets.
To maximize wealth, it’s time to stop asking “How much do we need?” and start asking “what will we do?”
Marine Corps General James Mattis once said “the most important six inches on the battlefield is between your ears”. While he may have been talking about combat, when you think through the constantly shifting financial landscape, the battlefield metaphor is incredibly appropriate.
There’s short term landscape shifts like market volatility, tax changes, and inflation, and major tectonic shifts like the introduction of 401(k)s and the shift away from pensions in the 80’s. Regardless of the shifts, be it temporary or tectonic, the most important driver of financial success has always been your attitude around money and the questions you ask yourself.
The challenge: the questions you ask yourself and your attitude, if you are not careful, can be a product of where you are right now rather than where you are heading.
When you are starting out and living paycheck to paycheck near the bottom rungs of Maslow’s hierarchy of needs; the question “how much do we need?” is appropriate. It starts the money triage process that makes sure every dollar is allocated appropriately.
Asking from fear
The problem: “How much do we need?” is a survival mode question and is rooted in fear.
It is a wonderful motivator but can only carry you so far. Fear has gravity and if you don’t have something else pulling you forward, you will get sucked back to the ground.
Fear and need cause us to be short-sighted and require mass amounts of energy to sustain.
Asking from abundance
To reach the higher levels in wealth and Maslow’s Hierarchy, you need a pulling force. This is where aspiration and asking better questions help. Aspiration can take the momentum fear provides to get you started and help take you the rest of the way. The pull you get from a clear vision helps you move from reaction to action. It helps you start thinking strategically about what is needed to make it to the top.
This is where the right question when it comes to wealth is so critical. The best way to help you develop a clear vision and start building that “pulling force”, is to change the question from “How much do we need?” to “What will we do?”
“What will we do?” makes the implicit assumption in your brain that you have already succeeded, now all you need to do is fill in the details.
This is important for two reasons – one, it helps you get going, and two, it helps you keep going.
Putting your questions into action
Let’s start with the get going part.
When you start thinking about “what you will do”, you must have a very clear image in your brain of success. And that success doesn’t have to be Elon Musk level of success. The “what will you do” question could be as simple as “what will we do?” when we have no consumer debt. The key is specificity. Some examples: What will we do when we have no consumer debt, have a $100k in cash in the bank, have a rental property in the mountains, have enough passive cash flow for one of us to quit our jobs, have enough disposable income we can save and take a vacation every year ??? The what if’s are endless.
The key is the questions have to be specific and personal enough they are meaningful to you. The more specific the better chance you can define the next steps to get there. For example, if the “what will we do” is paying off debt, the solution begins to present itself, but now it presents itself as an aspirational goal and not a finger wagging “should”. When it is a “should” it is a chore and something you have to slog through. Sustained motivation for such things is tough.
Now to the keep you going part.
Creating wealth and sustaining this behavior around money is not easy. It requires discipline, strategic planning, and a beginner’s mindset. And let’s face it, those things can be challenging to sustain, even with a big grand vision of sitting on the beach sipping cocktails. Therefore, in addition to the big dream, plan to enjoy some interim rewards along the way- it will help you mentally avoid burnout.
For example, if you have been working away to pay off consumer debt and you go from one credit card to the next with no break, it is very easy to get fatigued. This is where some small “what will we do?” motivations can be very helpful. If you have been working for six months to knock down a credit card, don’t immediately go to the next card when you are done. Take a month off from “adulting”, take the money you have been plowing into the credit card and do or buy something cool as a reward. It may delay your goal by a month or two, but if it mentally keeps you in the game because you get to realize the fruits of your labor, it is totally worth it. This activity can also help you by breaking up the big grand vision into smaller and more achievable chunks.
Over the years I have learned two immutable facts. One, 73.68% of all statistics are made up on the spot. Two, 92.45% of success in life is tricking yourself into making good choices. If you can shift your mindset from need and scarcity to abundance and dreams, you have accomplished the single hardest trick in creating wealth. Believing it is possible.
*Registered Representative and Investment Advisor Representative of and securities offered through OneAmerica Securities, Inc., a Registered Investment Advisor, Member FINRA, SIPC. Benchmark Income Group is not an affiliate of OneAmerica Securities and is not a broker-dealer or Registered Investment Advisor. Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. Investing involves risk which includes potential loss of principal.