Where Should I Start My Financial Race?

Like everything else in life, there are certain steps to follow to achieve something. Here are the steps that most people should follow to achieve financial independence, build a safe retirement  and create generational wealth. 

Are you ready? START

What should I do to protect the financial future of my family? How can I create generational wealth? Even if this page is written mostly for people that just started their financial race to building wealth, it can be very beneficial for people that have already saved a lot of money already. In my opinion,  if you are new to creating wealth for your family, these are the categories of investments or savings that you need to maximize to increase wealth,  by importance

Categories of Investments by Importance

  1. Get a Living Benefit Life Insurance. 
  2. Save 3 to 6 months of income for rainy days
  3. Save the FREE money that you can get
  4. Start a TAX FREE savings plan
  5. Tax deferred money
  6. Taxable money
  7. Protect your money through Wills and Trusts and get Legal Protection.

1. Living Benefit Life Insurance

1-The #1 priority for your family should be getting a Life Insurance with Living Benefits. If you have a family that depends on your income, it is inexcusable not to have this type of life insurance. We don’t want to think about our demise and the chances of an early demise are pretty slim, but the chances of developing a debilitating health problem are pretty high.

   Can you imagine being a burden for your family because of your health? On top of the fact that your spouse all of the sudden has to provide for the family, he/she has to take care of you too? It is not acceptable, especially when getting a Life Insurance with Living Benefits is so inexpensive.

   For more info about how a Life Insurance With Living Benefits works, click here.

2. Save 3 to 6 months of Income for Rainy Days

   I know it’s hard for most of the people to do that.

   Until you have this money saved you should not look at other financial investment strategies. Now with the coronavirus lockdown strategy this has been proven more than ever, because it has affected such a large segment of the population. 

   Most of the financial advisors are debating if saving 3 to 6 months of income, or getting a Life Insurance with Living Benefits should be first for obvious reasons. Getting the Life Insurance won in my book since it is so inexpensive and the leverage is so big for the money that you pay monthly.

   This money should be saved in an account that you can have access to it right away, when you need it. It can be an account that can give you returns or not. You will not touch the money in this account unless it really is a “rainy day”. Going out to that fancy restaurant because your friends are going, doesn’t constitute a rainy day. Getting fired from your job, not being able to work for few months, home getting flooded and the insurance will not cover it, these are examples that constitute a rainy day. After you use it, your first goal will be to replenish it back.

3. Save the FREE Money That you can Get

   Unless you have a rich uncle, the only way that you can get free money in the business world is through a 401K matching program. If you have been checking out the rest of this website, you might be a little confused right now. We have been pointing out the benefits of building a Tax Free Retirement for your future vs the taxed retirement that a 401K program has.

   Well, free money is free money. Whatever matching contributions your employer will give you, you should take. Put enough money into your 401K to max the matching contribution. No More, No Less. If it is a percentage of your income that your employer will match, figure out the actual amount in dollars and that’s how much you should contribute.  This is a 100% immediate return for the money you are saving.  

   I know I have tried to make a point on the fact that 401 K and other qualified plans have the highest risk when it comes to the market taking a dive. To mitigate that risk and still participate in the market, if enough money has accumulated in your 401K or other qualified tax deferred plan, or for that matter any money that you have saved, you can choose to have one of the best financial experts in the country ( An Active Money Manager) that is being invited to all of the major financial tv programs, manage your investments. . Go to this page to learn more about it. 

   If you want to play even safer, you can roll it over into an annuity. Click here to learn more about annuities.

4.Start a TAX FREE Savings Plan

   The only 2 viable alternatives for a Tax Free Saving Plan are an Indexed Universal Life insurance (IUL) or a Roth IRA. In this website you will learn more about how these 2 plans work. To make a choice between these 2 plans there are 4 questions that you will have to answer to :

  1. How old are you when you start saving your money?
  2. How much money are you planning to save per year?
  3. Are you risk averse?
  4. Do you need a death benefit?

   The rule of thumb for choosing one or the other is this: If there is no need for a death benefit, you don’t mind taking a risk in the market, don’t need the money until you are 59 1/2 years old and you can’t save more than $6000 a year, get a Roth IRA.

   If you want to play it safe and believe that the market will crash again, If you want to build generational wealth, if you are under 50, I would say Get an Indexed Universal Life Insurance. If you are older than 50 but you can afford to invest more money, an IUL can be a viable alternative for you too. 

  To make a better informed decision, contact us to run several scenarios for you.

5. Tax Deferred Money

   All of the qualified plans work with tax deferred money, with the exception of Roth IRA.  Instead of paying taxes only on your contributions to the savings plan, you will end up paying taxes later on contributions and gains in the distribution phase of the plan.

   Also, since most of the financial advisers think that the taxes will be higher in the future, you’ll most likely end up paying a higher percentage than you will pay right now. 

   Another thing to look at, are all of the restrictions and penalties to get your money out of these saving plans. The only advantage is that you save money on taxes, on the contribution phase, thus leaving you with more money to play now.

   Most of the qualified plans are tied to a mutual fund that can take a loss when the market is taking a dive. 

   As your financial advisor, I would rather you hate me now in the contribution phase and thank me later in your retirement years, when you and your family needs this money the most for a safe, peaceful and maybe even early retirement.

6. Taxable Money

   Unless it’s taxed as capital gains, taxable money should be the last investment you should make

   The return on your investment has to be very big to support the taxes that you will need to pay.

The job of a financial advisor is to make it a little bit uncomfortable for you. I would rather you hate me now in the contribution phase and thank me later in your retirement years, when you and your family needs this money the most, for a safe, peaceful and maybe even early retirement. I would say, do whatever you can to save as much money as you can and as early as possible. 

Find the things that are not totally necessary for you, that you pay for, month in and month out and try to cut them out of your life. Some examples would be: 

  • your cable bill, eliminate it or reduce it. 
  • entertainment-find cheaper options.
  • newspapers and magazine subscriptions-cancel them.
  • gym memberships – can you find a cheaper alternative or can you workout at home? 
  • eating out – can you brown bag your lunch or reduce the restaurant dinners?
  • coffee – instead of buying a $5 coffee everyday, can you make it at home?
  • auto and car insurance – shop around for better rates 
  • cell phone bill – reduce it if you can
  • childcare and organized child activities – find cheaper options. 
  • clothing – do you need that many clothes and shoes? 
  • landscape and house cleaning – can you do it yourself? 
  • if you are smoking or drinking too much – can you quit? 
  • pet grooming – can your pooch go a little bit longer between grooming visits?
  • pet toys – do they need that many toys?   

What Next?

   If you would like to learn more about how an Index Universal Life Insurance works and if it is a good product for you, click here 

   If you would like to learn more about the principles of finance and how middle class America saves for retirement and creates generational wealth, join our hour and a half webinar – How To WIn At The Game Of Money.

   If you would like to receive a Financial Needs Analysis to see where you are in your financial journey and to set a financial goal for you and your family, start here.

   If you would like to set a FREE ½ hour consultation, check my calendar and set an appointment.

   For any questions, contact us

Hegemon Group International, LLC. (HGI) is a marketing company offering a vast array of products and services through a network of independent affiliates. HGI does not provide insurance products, real estate, legal or tax advice. In the USA, insurance products offered through Hegemon Financial Group, LLC (HFG); and in California, insurance products offered through Hegemon Insurance Solutions, LLC (California License #0I0198) – collectively HFG. HFG is licensed in all states and the District of Columbia, except Massachusetts. In Canada, insurance products offered through Hegemon Group International of Canada ULC in the provinces in which it is licensed.

Florin Chris Uta is an independent associate of HGI.

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