Step 1 - Spend Less Than You Earn

Posted on January 15th, 2008 in Financial Abundance by wayne

The first step on the path to financial abundance is to spend less than you earn. While this may seem simplistic, a large portion of our consumer based society does not follow this simple step. While some people, living in true poverty, cannot follow this step, many Americans have simply chosen not to follow it. Because of this choice, the average American family now has over $10,000 in credit card debt.

Financial abundance is a product of our choices. If we choose to take the path to financial abundance, the first step is to create “excess earnings” by spending less than we earn. “Excess earnings” are simply the amount of earnings that remain when yearly expenses are subtracted from yearly income. For most people, “excess earning” amounting to 15% of after tax income is sufficient. If 15% is not possible, start with 5% and add 1% more every six months. In five years, you will reach the 15% savings goal.

To assure that you meet your “excess earnings” goal, I recommend that you “pay yourself first.” If less than 15% of after tax income is withheld for your company retirement plan, on each payday, “pay yourself first.”  Into your “excess earnings” account, deposit the difference between 15% of your after tax earnings and the amount withheld for your company retirement plan. The “excess earnings” account helps begin your journey to financial abundance.

If you have any credit card debt, the first use for your “excess earnings” is to pay off this debt. This will require a consistent application of funds to your debt, combined with a significant reduction or elimination of further credit card purchases. Remember, if you have $1,000 in credit card debt, you likely will pay $200 or more per year in interest and receive nothing in return.

Once you have paid off your credit card debt, the next use for “excess earnings” is to build an “emergency fund.” This is an account, with highly liquid assets, that can provide 6 to12 months of income when a short term emergency occurs. With an emergency fund, if you are laid off from your job or are temporarily sick or disabled, you will have adequate savings to withstand this “emergency.” Without an emergency fund, you might be required to prematurely withdraw funds from your retirement accounts. This approach has short term tax penalties as well as the long term consequence of diminishing the funds available to fund your retirement.

Once you have paid off your credit card debt and built an emergency fund, the “excess earning” fund can be used for a down payment on your first house, for your children’s education or to help fund retirement. The next steps on your journey to financial abundance can only begin after you take control of your spending.

The Path to Financial Abundance

Posted on January 4th, 2008 in Financial Abundance by wayne

As we start a new year, it may be helpful to analyze strategies for taking more control over our financial health. By taking a more active role in our financial life, we begin to escape the fear of financial scarcity and start living with a feeling of financial abundance.

For some people, fear of financial scarcity controls their lives. When the fear of scarcity is controlling us, we will often either 1) Do nothing, out of fear that anything we do will be wrong or 2) Try “get rich quick” schemes which may leave us in a worse financial position.

To help my clients escape the fear of financial scarcity, I developed:

The Seven Steps of Financial Abundance

1. Spend Less Than You Earn
2. Maximize All Financial Resources
3. Minimize Taxes
4. Actively Manage Investments
5. Protect All of Your Assets
6. Keep Control Over Your Finances
7. Have Faith in Continued Abundance

These steps are basic tools to help control our financial lives. These tools are designed to help you “get rich slowly,” by using strategies to minimize your tax burden as well implementing techniques to manage and protect your financial assets.

In future posts, I will provide more detailed information on each step, including specific implementation strategies. Hopefully, this will help anyone who is interested in finding their path to financial abundance.

Welcome to Financial Abundance

Posted on September 3rd, 2007 in Financial Abundance by wayne

Are you interested in living from a position of financial abundance?

Meeting current financial obligations, saving for your family’s education and retirement expenses while increasing charitable giving are the outcomes of living in financial abundance.

With a better understanding of your financial health and new approaches to meeting your financial goals, your fears of financial scarcity will be reduced. By implementing the strategies covered in Financial Abundance Guide, living in financial abundance can become a reality.

I will be publishing blog entries to provide information that may help you increase your sense of financial abundance. These entries are meant to supplement the material contained in Financial Abundance Guide. If you have questions or comments on the information provided, please add to my blog.

Over time, my goal is to have a blog where people can increase their personal financial knowledge and learn to live from a sense of financial abundance.

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