Most of my blog posts stem from the situations that I observe in both my professional and personal life. However, sometimes other financial professionals set out a very good case for financial planning that needs to be shared with my readers. Therefore the next 2 blog posts deal with 1 topic: How to get the room with the best view.
When I attended our annual company conference in San Francisco, our hotel room was on the third floor. The view from the window looked out onto another tall building. However, the top of the hotel had a conference room with huge windows on all sides which enabled one to see a panoramic view that was always interesting.
This blog post is based on a conference call with Evelyn Jacks a renown tax expert and founder of Knowledge Bureau. She compared our financial life to the floors of a building. We start out on the ground floor. With our precious human capital, skills and talents we get on the elevator to the second floor. Our human capital enables us to start building our financial capital.
On the second floor our financial capital is all non discretionary. Every dollar is allocated to one expense or another. These are our tuna sandwich, macaroni and cheese, university and just beginning working life. Very little play money here. But we are determined and forge ahead.
The next floor is the most important floor that will determine whether or not one gets to the room with the best view. On this floor we have some discretionary income which can allow us to increase our financial capital. But here is the floor that some people can get stuck on. It is lifestyle choices that determine whether you will push that elevator button to go to the next floor. That is the topic I will discuss in the next blog post.
The floor above is where you will manage the risks of inflation, taxes, and fees that can affect your investments.
Finally if you have created lasting wealth there is the possibility of leaving a tax efficient legacy to the next generation. Here, in the room with the best view you will be able to look back on your life and give yourself the lifetime achievement award because you have been a careful steward of your resources. At that point will you be able to say that your financial capital has benefited from lifelong compounding?
One reply on “The Room With the Best View”
A good and simple way to show people the steps to a good way to set aside futire monies.