In the presentation for this June 2017 Family Life Retreat, the segment about money is going to follow a few basic principles and assumptions. In order to keep things easy and simple in the short seminar, the way money is handled will be covered in three stages.
Before we get to the stages, let’s clear up a few assumptions this presentation is going to make:
- A family is lead by two people working as a team
- The heads of household are sharing information together
- They are on the same page about their goals and aspirations
- Both understand how to use and maintain a bank account
- Both are capable of learning new material about money
Reason for the stated assumption, the topic of money is broad and can not easily be contained in one single hour of lecturing. Therefore, we’ve assumed that everyone already has these basic principles. The advance understanding of money will not make this presentation any less valuable mainly because many people who know way more than what is presented do not behave as though they do.
Most people know they should invest, most know they should save, most know to get rid of debt… yet most families carry debt, most families are a paycheck away from financial difficulties, most can not scratch together two thousand dollars to cover any surprise emergencies. Therefore, having information is not the problem and not the answer.
To help people connect on an emotional level, the place where most decisions eventually get made, the three stages of wealth creation will follow a story arch to help connect the heart and the head together. The goal is that when the presentation is done, people will have a framework to connect their knowledge and experience with the ambitions and feelings to get the results they want.
Always consult a financial adviser about the details of your personal and immediate circumstances… so you can get tailored advice
Basic Balance Sheet
While many have heard the term, the use of a balance sheet seems to remain in the professional arena. The closest many get to having one is via an app on their phone.
The balance sheet helps you see how much money is coming and going and through what channels. Meaning… most people make money from their job and most will let it flow out through groceries, travel, housing, and other types of expenses. The balance sheet lets you see all of that in one place.
The balance sheet also let’s you see how much liabilities you have in the form of debts mainly as well as assets… in the form of savings for most. The degree of sophistication varies greatly, so to keep everyone on the same page, a sample pdf balance sheet is attached to this post.
Stage One of Money: Foundational Pieces
The most critical place to start is with what is coming in and where is it going. Without understanding this, one could be living in the red and getting worse without even knowing they’re getting worse until catastrophe strikes. Or one could be doing ok but not making progress and not realize it until there is not enough time to prepare for retirement or vacation.
The associated pdf of this helps one see the three different ways one can look at the basics of how money flows in the home. The better understanding of your money you have, the better you can make adjustments, improvements, and modifications that will get you to where you would like to be. Most individuals hope to have no debt and some savings. We want you to have no debt, plenty of savings, and many options to pursue the life you want.
Stage Two of Money: Platform Moves
Most people will spend the majority of their lives in the Platform stage of money. This is where children are raised, this is the coasting along and getting by area most people feel is the grind and struggle of modern living. Many also use this opportunity to build up the wealth they hope to have for retirement. Life feels good. Life flows. Many things happen on this journey.
The pdf helps show how coasting verses being ok/good looks versus having a focused plan. The use of compound interest is why this platform stage is so important. The more time your money has to grow, the better it will perform. The key is to keep tabs on what your money is doing and letting it grow steadily without tapping into and depleting it. That can only happen when one is sticking to… and adjust only when needed… the plan.
Stage Three of Money: Legacy Ledgers
This is where people start thinking about retirement all the way through thinking about what they will leave behind for their children. Many changes happen and cash flowing in drops from the peak it once had. This is the place where debt is so detrimental. This is the place where one pays for all the choices made over the years. In the pdf, we look at a few examples of how that may end up looking.
all the above pdf examples were intentionally made fictional as to not single out anyone particular family. The numbers are very conservative on purpose
The conversation is just starting. There are many levels to finance. The more one knows, the better one can create security in moments of uncertainty. There is a more detailed blog post that discusses all the above during this seminar. Feel free to read it.
No matter where you’re at in your journey as CEO of your home, remember, you can improve your situation over time by making smart choices and staying wisely informed. Do not leave your future to chance. Do the work, get the results. Count your blessings, and thank the Lord for your blessings.