Is Your Money Working For You?

I had the pleasure to be in a wealth preservation event hosted by a good friend of mine last Thursday. During the happy hour, a few of us got together and talked about some random, real life stories around us that we are usually too busy to care about in our day-to-day life.

One story lingers in my mind that I would like to share here.

Let’s name our subject matter Mr. X. He was a white collar professional who made pretty good living, probably the top 10 percentile on the scale of earned wages.

Like many working upper middle class, Mr. X put aside one-third of his salary for the mortgage payment of his primary residence, one-third to Uncle Sam, one-sixth for living and entertainment expense, and the remaining one-sixth for saving and retirement account.

Unfortunately, by the time Mr. X reached fifty, he got into an accident and became disabled, which prevented him from working and bringing income to his family.

A new chapter in life began. Even with the retirement account, disability insurance and government benefits, this new family income was still a lot less than what it used to be. Mr. X and his family members had no choice but gave up a lot of things they took it for granted.

The whole family’s standard of living took a deep dive.

Let’s ask ourselves two questions:

What did we learn from Mr. X ?

How can we prevent similar things from happening to us?

Though running into an accident is something none of us can control, we can certainly better prepare ourselves financially if we stopped working due to whatever events that happened to us.

In the case of Mr. X, he spent most of his time working for money. That is, he relied way too much on selling his time in exchange for income generation.

As soon as he stopped working, his employer had no obligation whatsoever to pay him anything, and he was stuck with the minimum benefit arrangement set up by our government.

Don’t take me wrong, in the early stage of our career, we should be working very hard for money (unless we were born rich). But as we get older and save up some money, we should use the savings to build ourselves a financial framework so that whatever money we made can start working for us in the future.

Remember, it is just a matter of time that the rainy day will come.

Don’t rely on your employer or government to take good care of you!

Instead, we want to make sure our financial framework is well-oiled when the thunderstorm hits.

Smart and wealthy people have close to zero earned wages. However, what they have is the control of the assets that can generate themselves passive income.

With multiple sources of passive income, wealthy individuals have no need to sacrifice their personal time for money.

They are the master of their personal time!

With time, they can look for opportunities and invest their freshly minted passive income to acquire even more assets that can make more money to work for them.

By mastering this mindset, we can all build out our very own financial framework and get our money to work hard for us.

   

You may also be interested in the following:

  1. Middle Class Is For Suckers
  2. The Essence of Financial Independence Part 1