The past 2 days I’ve shared with you some way to improve your personal finances. Full disclaimer: I’m not a licensed financial advisor, so they’re just ideas to get you thinking about what could work for you.
Today, though, I’m going to share with you what I’ve done for myself. Each component of my income serves its own purpose… one just as important as another.
The auto repair shop provides my “expenses” . . . my vehicle and all of the expenses associated with it, my health insurance, my cell phone, and other minor expenses. That’s it — the balance of the earned income stays in the company to create stability.
My publishing business provides the income needed to pay my “taxes” . . . that’s right, I have one entire company dedicated to funding just one liability — my annual estimated income taxes. That’s it — the balance of the earned income stays in the company to create stability.
My holding company provides for my “retirement” . . . ALL of the income my holding company passively collects is reinvested into long term, ultra conservative compounding retirement vehicles. The sole objective here is to see my wealth grow slow and steady for later in life.
Finally, my trading business provides my “lifestyle” . . . my living expenses, maintaining my home, providing for my spouse and day to day living expenses. Whatever is left over remains liquid for larger purchases and expenses that always seem to pop up.
That’s it — this is my entire financial breakdown in a nutshell. Now obviously there’s intricate details within each of those components, but that’s the overview of how I manage my money.
Everything has a purpose, and that purpose should be easily attainable for each asset so there’s always excess for a rainy day.
Should one of my components change, it’s easy to adjust another to compensate for it.
The key to the entire process is having ZERO DEBT. That’s right — not carrying a single cent of debt allows each component to breathe… and most importantly, it allows me to breathe!
Was laying this foundation easy? HELL NO!
But looking back, having all of this in place before turning 40 has been invaluable!
The fact of the matter is I could easily live on just one of these income components, but I’d rather allow them ALL to flourish and just live off of their drippings so they never dry up.
And if someday one of them should dry up, they’ll be compensated by another and replaced.
This is what my financial stability looks like. You need to decide what YOURS looks like and take whatever steps necessary to accomplish it!