by MSE Staff | Published 9 Aug 2021 (Updated 2 Nov 2021)

The IRS’s 2018 data for Individual Retirement Arrangement (IRA) plan contributions reveals a major gap in wealth accumulation. Although 77.3% of taxpayers were eligible to make contributions to their IRA plan(s), only 8.7% of eligible taxpayers contributed to their IRA plan(s) in tax year 2018. It’s clear that people are not actively investing in their retirement. Three barriers to active IRA plan contribution include unplanned expenses, credit card debt, and needing money for basic monthly expenses (1). People are not investing in their future due to a lack of financial stability and economic security. These are two challenges that financial education specializes in. Learning financial behaviors that create financial stability and economic security add up to your financial success.

Retirement Contributions by the Numbers

A closer look shows that 161,266,301 out of 208,537,968 taxpayers were eligible to make IRA contributions in tax year 2018. Shockingly, only 8.7% of eligible taxpayers made contributions to their IRA for tax year 2018. Women were less likely to invest in their retirement except for those who filed jointly by 0.5%; in which case, 12.1% of those eligible made contributions to their IRA plan(s). 11.5% of eligible men who filed jointly made contributions to their IRA plan(s). The impact of financial instability and lack of economic security is far reaching.

Those with a higher Adjusted Gross Income (AGI) were more likely to contribute to their IRA plan(s) in 2018. The difference was so vast that 10% of those eligible in the 50^th to 75^th percentile contributed to their IRA plan(s) while 26.6% of those in the 99^th and above percentile contributed to their IRA plan(s). It’s clear that financial stability and economic security are the key to increasing the likelihood to investing in your retirement.

On average 10.8% of eligible taxpayers between the ages of 25 and 65 contributed to their IRA plan(s) in 2018. Contributions were significantly lower for all other age groups. This is also an economically productive time for most adults. However, an average of 10.8% participation among eligible taxpayers between the ages of 25 and 65 is a cause for concern.

Obstacles to Retirement

Schwab Retirement Plan Services released a study in 2019 that highlights the top obstacles preventing 401(k) account holders from contributing to their IRA plan along with top sources of financial stress. The survey of 401(k) participants in the U.S. was conducted by Logica Research on behalf of Schwab Retirement Plan Services. The biggest obstacles included unplanned expenses, credit card debt, and needing money for basic monthly expenses. The biggest sources of financial stress were having enough money for retirement, paying off credit card debt, and having enough cash flow each month (1). No matter how you slice it, financial stability and economic security are a big obstacle to retirement.

Achieving Financial Success

Learning behaviors that create financial security and economic stability are essential to achieving financial success. Financial education focuses on getting you to take action. Only 8.7% of eligible taxpayers were able to take action and contribute to their retirement in 2018. I think we can do better. I teach people how to manage their money so that they can build wealth. If you’ve been experiencing the symptoms of financial instability and lack of economic security, chances are that you haven’t been consistently investing in your retirement. There is a path forward for you to have financial stability and economic security so that you can build wealth.

I’ve found that Money Smart Transformation works well for people who have careers and Money Smart Pivot supports entrepreneurs in their journey. Both programs include financial education, implementation and mentor forum to guide you from financial recovery to building generational wealth. Money Smart Pivot includes private mentoring sessions where you can focus on topics unique to your business. No matter where you’re starting from, Money Smart Transformation and Money Smart Pivot can meet your needs for achieving financial success. Schedule a discovery call to learn if one of these programs is right for you.

References

1. Schwab Retirement Plan Services. 401(k) Participants' Investing Behavior May Leave Them Short. Schwab. [Online] 2019. https://www.aboutschwab.com/schwab-401k-participant-study-2019.

by MSE Staff | Published 1 Aug 2021 (Updated 5 Nov 2021)

There’s no denying that 2020 drastically reshaped everyone’s lives. Much like The Great Depression and Great Recession, we are in the midst of a generation defining event. The pandemic has drastically reshaped how many people define financial wellbeing. It has also changed the way people handle their money. Thanks to a survey “conducted by The Harris Poll on behalf of Empower Retirement and Personal Capital from March 23, 2021 to April 5, 2021 among 2,005 respondents,” we now have more clarity on how the pandemic has reshaped our lives (1 p. 32).

Rethinking Financial Wellbeing

How do you define financial wellbeing? Would you say that it’s about making at least $75,000 per year in your career? Or, would you say that it’s about having an individual retirement account?

The Consumer Financial Protection Bureau (CFPB) spent over 60 hours interviewing people to get a solid idea of what it means to be financially well for their 2015 report. The CFPB found that to be financially well, you:

• “Have control over day-to-day, month-to-month finances;
• Have the capacity to absorb a financial shock;
• Are on track to meet your financial goals; and
• Have the financial freedom to make the choices that allow you to enjoy life” (2 p. 5).

While these four parts express it well, Personal Capital’s 2021 report shows that the meaning of financial wellbeing changes. The meaning of financial wellbeing changes for each of us depending on life events and our life stages.

Americans today define financial health based on “the links between financial matters and other parts of life” (1 p. 7). That’s a groundbreaking discovery! Americans see financial wellbeing as having holistic financial stability in pursuit of a better quality of life. This is a big departure from viewing financial wellbeing as a monetary milestone. The pandemic has brought life-domains to the forefront of financial wellness.

How does your financial state impact your different areas of life? We know that answer changes depending on your life events and life stage. And, the meaning of financial stability is different for you when you’re 20 years old with no dependents than it is when you’re 50 years old with dependents. The importance of our life domains wax and wane throughout our lives. For example, establishing a career is more important to someone who’s younger than someone who’s getting ready to retire. This report really highlights how people are more aware of financial wellness than many experts have given credit for.

Barriers to Financial Wellbeing

Pull anyone aside and ask them what areas of life are most important to them and they will tell you. However, financial stability and these life domains can have complimentary and detrimental interactions between one another. A lack of financial stability is a detrimental interaction flowing out of your finances and into different aspects of your life. A great example of this is having your hours cut at work and not having money set aside to weather the storm. The reduction in income is sure to impact your non-essential spending first. That may manifest as switching to cheaper food, making adjustments to family outings, or carpooling, etc. Financial stability plays a major role in our financial wellbeing.

The most prevalent barriers to financial wellbeing were not getting paid enough, expenses piling on, and an inability to save (1 p. 24). The math is easy to get behind. When you have more money going out than coming in, you have poor cash flow. An inability to resolve this challenge only causes more pain points like not being able to save and sinking deeper into debt. These are hallmark symptoms of financial instability. Let’s look at how people are adapting.

How The Pandemic Changed Money Habits

Many people reported cutting back on non-essential items, focusing on saving, and thinking about financial planning more often. Much like the Great Depression, many people are becoming more frugal in response to the economic turmoil. Financial stability has become a very attractive lifestyle choice among Gen Z, Millennials, and Gen X. Stability and financial security are more important now than ever (1 p. 13).

However, a closer look reveals that Americans perceived financial literacy as the least important factor to good financial health. The two most important factors Americans perceived for good financial health were having enough to pay their bills and having enough money in their accounts (1 p. 17). It’s important to point out that there is a positive correlation between being financially literate and having financial stability. This is because people who are financially literate are able to demonstrate the capability to make sound financial decisions.

Financial Education & Wealth Mentoring

Financial Education is an important step in developing behaviors that produce financial stability and ultimately your financial wellbeing. This is why those who are financially literate have much better odds of recovering from a financial setback. Achieving financial stability and financial wellbeing gets even easier to achieve when you have a mentor in your corner. Boost your financial growth with expert support at your fingertips.

I offer unique programs and systems for building wealth. Speak to a real person that’s attentive to your needs in the classroom. With Zoom-based sessions, I can answer your questions in the class. Realize your own system for building wealth with Money Smart tools to guide you. Demonstrating your financial capability becomes much easier when you have the right tools and guidance. Plus you can take on your biggest financial goals with a private mentor at your side.

References

1. Personal Capital, an Empower Company. The Journey Toward Financial Freedom: How Americans define financial wellbeing, how they get there and what stands in their way. s.l. : Empower Retirement, 2021.

2. CFPB. Financial Well-being: The Goal of Financial Education. s.l. : Consumer Financial Protection Bureau, 2015.

by Curtis Banks | Published 25 Jul 2021 (Updated 5 Nov 2021)

Wealthy people stay wealthy by making sound financial decisions and lifestyle choices throughout their day, every day. The five core areas of your financial health that are impacted by financial decisions and lifestyle choices include income, assets, credit, insurance, and debt. Wealthy people are good at balancing these five areas and thus insulate themselves from financial hardships. We’ll examine the differences between Ashely and Diana’s choices in each area.

Ashley's Story

Ashley is a mother of two working full-time in an administrative support role at a small firm. Like many in her field she makes around $17.41/hour. Ashley is a $0.77 raise away from making it into the 40^th percentile of wage earners in the United States. She is just $2.99/hour shy from being able to afford a modest one-bedroom apartment at fair market value according to the National Low Income Housing Coalition (NLIHC). She is also $7.49/hour shy from being able to afford a modest two-bedroom apartment at fair market value according to the NLIHC. Ashley represents 36% of all households in the United States; they are unable to afford a modest apartment at the national average fair market value based on wages. Yet Ashley is wealthy and prospering.

Ashley has created three sources of income for her family: her job, selling online courses, and Air BnB. She keeps a record of her income so that she can reliably predict what she will make each month. Ashley has positive cash flow at the end of each month because she manages her income and expenses. It doesn’t stop there.

Ashley manages her assets for success. She takes full advantage of the retirement benefits package at her workplace. She meets with a financial advisor regularly to make sure that she achieves her financial milestones. Ashely has emergency funds set aside along with 6 months of living expenses saved up, and she contributes to a college fund for her kids and for herself.

Credit is not an issue for Ashley because she always pays on time. Because she has a good credit score and healthy credit history, Ashley enjoys access to capital at a low interest rate with low payments. Ashley monitors her credit report regularly to make sure that it is accurate and protected from theft.

Ashley protects herself and her family with adequate insurance. She has an estate plan and is protected for emergencies. She sleeps easy knowing that her wealth and health are financially insured, and her kids have economic security.

Ashley has no debt on her books. Even though she fits into a category of disadvantaged, she has taken steps to educate herself and protect her finances. Today, Ashley is wealthy and happier because of the choices she made. Diana’s story is a world apart, however.

Diana's Story

Diana works full-time as a psychiatrist and was never interested in having children. Her career brings in around $114.28/hour easily placing her within the 90^th percentile of wage earners. Diana’s wages pay more than enough to afford a modest apartment at the national average fair market value. Diana has some huge advantages, but she is far from being wealthy. Let’s see why.

Diana has a great income from her job. She currently has one income source, and the payments are predictable. Diana likes to go out when she can and spends a lot on volatile investment opportunities. Sometimes it causes her to have negative cash flow at the end of the month, but it doesn’t bother her because she bounces back quickly. Diana has a little bit of trouble with the IRS, but she’s currently on a payment plan.

Diana does some things right with her assets. Her retirement is fully funded. However, she doesn’t meet with a financial advisor. Diana is so confident about her income that she only has 1 month of living expenses set aside. Continued education isn’t a big financial goal for Diana, so she doesn’t set money aside for it.

Credit is a sore spot for Diana. She has a habit of missing payments 1 or 2 times per year and has some unresolved collections from her college days. She doesn’t know this because she stopped checking her credit report years ago. It’s just something she never bothers to do.

Diana has some insurance, but she never spoke with experts to make sure it was the right insurance with adequate protection. She just went with the cheapest insurance she could find in order to check off some boxes. Couldn’t happen to me she thinks to herself. Diana thinks it’s a good idea to have an estate plan, but she has never taken action.

Aside from the collection debt that she is unaware of, Diana has student loan debt and tax debt. Her credit card utilization is high, and she pays more on high interest than she should be. Diana has yet to speak with a financial coach or financial advisor to make a plan.

Recap

Ashley and Diana are two people on opposite sides of a financial literacy spectrum. Financial literacy makes a big difference in how we handle money. Let’s explore how even though Ashley has a disadvantage in wages, her financial acumen, attitude and choices have put her in a better position than Diana. Finally, we’ll look at how Diana can make changes that will level the playing field.

Income

The Money Smart approach to income is to have multiple sources, know when it’s coming and how much you will make after taxes, and manage income using the Money Smart Allocation system to maintain a healthy cash flow ratio. Even though Diana has a higher paying wage than Ashley, it is clear that Ashley’s income is diversified, and Diana’s income is not diversified. If Ashley lost her job today or was unable to work, she has income from her online courses and Air BnB that she can rely on. If Diana lost her job or was unable to work, her income would stop. See the difference?

Having a high paying job is great but having multiple streams of income is building wealth. Ashley should continue creating more and more streams of income. The more she creates, the better off she and her children will be. Diana would be far better off setting goals to create and nurture new streams of income each year. By doing so, she too can build wealth.

Assets

It’s Money Smart to buy assets that produce positive cash flow! The same is true for growing your net worth, and it’s hard to do that without assets. There are experts who sell financial products that we can use to build wealth. We call them financial advisors. One of the key differences between Ashley and Diana is that Ashley met regularly with financial advisors to ensure she was getting good results with her assets. One area where Ashley could improve is to work with her financial advisors to focus on assets that will generate more positive cash flow for her. Ashley’s choice to have one account for her emergency expenses and one account with 6-months of living expenses is also Money Smart. As for Diana, her overconfidence in her current wages is causing her to make risky financial decisions.

Since Diana only has 1-month worth of living expenses saved up, she is more at risk of financial instability than Ashley. The more money Diana saves to cover her living expenses, the more time she will have to recover from a job loss or stay in retirement. Diana also doesn’t have any money set aside for financial emergencies. What will she do in the event of an emergency? She will likely dip into the money she has set aside for living expenses or put it on a credit card. Diana would benefit from working with a financial coach or mentor to make a plan and get her assets in order before disaster strikes.

Credit

Someone who is Money Smart makes sure that their credit history is accurate and that their credit score is high because they expect the best. Ashley does all the right things to increase the likelihood that people will lend her money; her decision to have more assets, no debt, and good credit puts her in a strong position. Diana has made some terrible financial decisions by choosing not to review her credit history or credit score on a regular basis. Had she taken a look, she would know that she has a collection on her credit report.

Today, there are a variety of free, paid, and complimentary services available to monitor your credit history and credit score. You can access many of them through your bank on your smart phone or computer. That’s why it’s difficult to find a valid reason for not knowing your soft credit score range or your credit history. Diana would be able to make much better financial decisions if she were informed. Leveling the playing field for Diana will involve taking a good look at her credit report and taking action to clean things up.

Insurance

The Money Smart approach to building wealth includes protecting wealth! Insurance is designed to provide an extra layer of protection between you and financial instability. Because she works with her financial advisors often, Ashley is able to select insurance that adequately protects her and her family. In the event that something happens to her, Ashley’s affairs are in order. The same cannot be said about Diana.

Diana did not consult financial advisors when choosing her insurance. She went for the cheapest solution she could find to get it out of the way. While she does have insurance, it’s not clear whether Diana’s insurance is adequate for her needs. It’s safe to assume that her wealth is not protected. Furthermore, her loved ones would be left to chaos because chose not to plan her estate. Diana could easily level the playing field by taking her insurance more seriously and planning her estate.

Debt

It’s Money Smart to grow assets and reduce liabilities. It’s Money Smart to grow income and reduce expenses. This is because liabilities decrease net worth and expenses decrease cash flow. Wealthy people grow their net worth and have a healthy cash flow ratio. Ashley currently has no debt. The best thing that she can do is continue to keep her debt low so that her net worth can continue to grow. Diana’s situation is quite different.

Diana has debt that she is unaware of! This is why it is so important to monitor your credit report at least once a month. Diana also has tax debt and student loan debt she must worry about. If Diana wants to level the playing field, she will need to start learning from financial educators, coaches, and speaking with financial advisors. Only then will she have enough information to make a plan and correct course.

Leveling The Playing Field

Wealthy people stay wealthy because they maintain their financial literacy, have a clear financial vision and clear financial goals, consult financial experts, maintain and attitude and lifestyle choices consistent with building wealth, and manage their finances to grow their net worth and increase cash flow. It all starts with your financial literacy and your attitude/beliefs about money. Think about what position you would want to be in when a financial emergency comes up. Would you rather have the kind of financial stability that Ashley and her family enjoy, or would you rather take Diana’s risky approach to finances and say YOLO?

A financial educator is the gateway to better financial decisions and more financial stability. That’s because a financial educator’s job is to get you off the sidelines so that you can take a proactive role in your own personal economy. You are the CEO of your life and your personal economy. Take a moment to reflect on the 5 core areas of your personal economy. Are you managing your income like a wealthy person? How are you managing your assets? Are you managing your credit to build wealth? Are you managing your insurance like a wealthy person? Are you managing your debt like a wealthy person? One of the best decisions you can make is to connect with a financial educator or a financial coach/mentor.

While my role as a financial educator is to motivate you take action, my role as a financial mentor is to focus on you, your uniqueness, and connect you with financial resources and financial advisors. You’re here to learn how to build wealth and continue building wealth, and I’m here to facilitate your goals goals through Money Smart Pivot. Money Smart Pivot marries financial education, implementation, and 1-on-1 mentoring together to elevate your personal economy. Put yourself in a position to take action in your personal economy and build wealth.

by MSE Staff | Published 19 Jul 2021 (Updated 5 Nov 2021)

Sometimes inspiration and insight can reach us in the most delightful ways! Sometimes we need to hear a message several times before it all comes together. That’s why I have pulled together 5 quotes that will change the way you think about money. Read on to develop your money smart mindset.

"You have to look for teachers. If you want to be a mechanic, go hang out with mechanics." – Robert Kiyosaki

This is some of the best advice the most people fail to apply in their finances. If you want to be good at building wealth, go hang out with people who are building wealth! Good or good?

"Someone is sitting in the shade today because someone planted a tree a long time ago." – Warren Buffet

Generational wealth! Plant the seed of success for future generations by creating generational wealth. How are you creating generational wealth?

"Life experiences inspire vision, and vision inspires success." – Curtis Banks

What drives you to be successful? The answer is hidden in your past! Know what inspires you, know your vision for the future, and pursue it with passion.

"You give before you get." – Napoleon Hill

The income you gain is a result of creating value for someone else. How can you provide value for others? Such a meaningful concept, right?

"If you keep on doing what you've been doing, you will keep on getting what you've been getting." – Steven Covey

This is another big one when it comes to finances. It’s important to keep learning and growing. Those who don’t learn are destined to keep repeating the same mistakes. Keep learning and growing.

by MSE Staff | Published 13 Jul 2021 (Updated 5 Nov 2021)

You’re well into your career and finding success with your investments. Now you’re ready to start creating streams of passive income, but you’re not sure what you want to do. Passive income is something that happens when the assets you own generate positive cash flow for you. If you’re looking for ideas of what to do, check out 7 Inspirational Ways to Create Passive Income. Here, I’m going to cover some tips you can use to decide what you want to do.

Understand What Your Goals Are

Your goals are your compass in life. You get to decide where you’re heading and set your own milestones. This is important because you’ll want to be able to answer this basic question:

Does this passive income opportunity align with my goals?

Your passive income stream can be used to fulfill your short-term goals, long-term goals, or both. Are you keeping track of your goals in all the different aspects of your life? Sometimes our focus can be too narrow or too broad when it comes to goals. Request of copy of my Daily Life Balance Dashboard to make sure that you’re covering all of your bases. If you’re already using the Daily Life Balance Dashboard, you can quickly see whether or not a passive income opportunity aligns with your goals.

What Are You Passionate About?

There are things that we know we are passionate about and things we have yet to discover in life. Draw a box on a sheet of paper and write a list of all the things that you know you’re passionate about in that box. Next, write down all of the things you’re aware of yet unsure about outside that box. Take a moment to examine your findings.

You are the CEO of your life. You decide what new experiences to seek out and what new passions you want to discover. The same is true about passive income opportunities. Take a moment to repeat the exercise but replace the passions you identified with passive income opportunities. If you find it difficult to list out passive income opportunities, that is a sign to start searching and learning more.

How Passionate Are You About It?

How much effort are you willing to put into the passive income opportunity? Are you willing to play at a level ten with the passive income opportunities you’ve identified. In this context, playing at a level ten means doing your due diligence. I describe this as four easy-to-remember steps.

First, learn as much as you can about your passive income opportunity. Learn how it works. Learn from multiple experts how to make it work for you.

 Second, make sure that your level of understanding is sufficient so that you are capable of making the right decisions. Your mentors are there to help. Don’t be afraid to ask!

Third, practice what you’ve learned. When you practice what you’ve learned, your understanding increases and you develop skills. Demonstrating financial capability is a skillset; the same is true about creating passive income streams. If you’re unaware of what skills are necessary, ask your mentor.

Finally, have multiple mentors that are willing to show you how to succeed. A mentor is someone who is successful at what you want to achieve, knowledgeable, and willing to show you how to find success. If you’re playing at a level ten, you’re willing to commit to these four steps on your good days and your bad days!

Make a list with two columns. In the left column, you’ll write down your passive income opportunities. In the right column, you’ll write down a number between 1 (low) and ten (high). Reflect on each of your selected passive income opportunities and decide what level you’re willing to play at.

Putting It All Together

If you’ve read this far, you now have a few solid tools to help you navigate which passive income opportunity is right for you. First, make sure that your passive income opportunity is in alignment with your goals. Second, make sure that you’re passionate about your passive income opportunity. It helps in the long-run and you’ll fell good about it. Third, determine how willing you are to learn, understand, and practice; follow through and play at a level ten. Fourth, make sure that you have mentors who are willing to guide you. If you can check off all four of these items, then you’ve found strong candidates for passive income opportunities.

by MSE Staff | Published 11 Jul 2021 (Updated 5 Nov 2021)

Imagine having a carefree day going to the places you like to go, doing the things you love to do, and feeling fantastic about it. That’s because at the end of the day your investments are creating income for you without you being there working. Welcome to the concept of passive income. There are generally three ways to generate income. These are sorted out as earned income, investments, and passive income. Today, we’ll focus on creative ways people are setting up passive income. But first, let’s briefly cover the different types of income.

Earned Income

Earned income happens when you exchange labor for money. This is one of the most common ways to create income. Most often, your labor is compensated as wages, tips, salary, commission, and bonuses. The key takeaways to earned income are that your time and the value of your labor dictate how much you can make. We all have a set amount of time that we can devote to work each day. This means that the value of labor is an important variable for earned income. However, passive income is our goal so let’s move on to investing.

Investing Income

An investment happens when you let someone borrow your money under the condition that they pay you back – along with compensation for the amount of time they have your money. Investments can become creative in and of themselves but that is the concept behind investing. The most common ways to be compensated for lending out your money include interest, dividends, capital gains, and equity.

The key takeaways to investing are as follows. First, your money grows overtime based on the terms you and your borrower agree to. Second, all investments assume a level of risk and reward. Investments create value over time based on the terms and interest rate. This means that it’s important to be comfortable with the terms and interest rate of your investment based on the level of risk you are willing to assume. However, most investments don’t qualify as passive income; they are considered assets that increase in value.

Equity is a bit different. Equity happens when you take on debt to acquire an asset. The goal is to have the value of the asset exceed the debt taken on when buying the asset. A great example of an equity investment is taking out a mortgage to buy real estate. The investor buys the real estate with the expectation that the future value of the real estate will offset the mortgage for a nice return. Understanding how to predict whether that asset will increase in value is very important. But that’s enough about investing, so let’s talk about passive income.

Passive Income

Passive income happens when the assets you own generate positive cash flow for you. Like investments, there are many creative ways to set up passive income streams. The important thing that distinguishes passive income from earned income is that you’re not exchanging labor for this income. And unlike investments, passive income generates passive cash flow for you. Some common income sources for passive income include rental properties, royalties, pensions, annuities, and business income. The key takeaway for passive income is that your asset is producing positive cash flow for you. With that out of the way, let’s look at some creative ways people are generating passive income.

Affiliate Programs

Affiliate marketing programs work by having a third party generate sales for your product or service in exchange for a share of the sales revenue. You may already have a great product or service that’s just waiting to make a positive impact in people’s live far beyond what you can do yourself. This can be an efficient way to spread the reach of your product or service while generating passive income. There are a variety of platforms and services that help make running your affiliate marketing program a breeze. I recommend that you learn and understand as much as you can about running your own affiliate marketing program if this sounds interesting to you.

Rental Properties

Renting out your property for others to use is an excellent source of revenue. Many of these options range from Air BnB to hiring a company to manage your tenants. The possibilities extend even further with people renting out their cars, storage space, and more. If you own it, chances are that somebody wants to rent it. Think about things that you own but never use; would you rent it to someone else for passive income?

Sell Your Knowledge Online

Think about something that you’re skilled at. Have you ever considered teaching it to others? An online course, book, or monetized YouTube video is a great way to generate passive income. It’s a big world. There are likely tens of thousands if not millions of people who would like to know what you know. If helping others succeed makes you happy, consider sharing your knowledge. It’s a great way to generate passive income.

Licensing Your Ideas for Others to Use

Did you create a new way of doing things, invent a tool, or develop an app that others can use? You can allow people to have access to your creation while generating revenue. This happens all the time in the background. Whether it be music, artwork, a process, or software, your intellectual property is valuable for you and for others. Take a moment to document your idea and understand who would be willing to pay you for continued access to it. You may discover a source of passive income.

Retirement Annuities & Pensions

Retirement plans are an important source of passive income when you’re retired and no longer working. Are you making the most of your employer’s retirement or pension plan? Retirement savings plans and pension plans are often overlooked as a source of passive income. Learn about your options and consult with a financial advisor so that you can make the most appropriate decisions around your retirement account.

by MSE Staff | Published 03 Jul 2021 (Updated 5 Nov 2021)

Money Smart Allocation is a system designed for you to pay yourself first. The Money Smart Allocation system states that 55% of your income should be allocated for investments, and 45% of your income is allocated for expenses. This ensures that you are focused on increasing your net worth and financial wellbeing.

How does Money Smart Allocation differ from a budget?

A budget is a plan for how you want to spend your money. Sadly, that’s what many people do when they budget away all of their income. Budgeting is often accomplished outside the scope of building wealth. Money Smart Allocation focuses on the key areas for building wealth and requires you to cut down on wasteful spending. The end goal for the Money Smart Allocation system is an increase in financial wellbeing.

by MSE Staff | Published 03 Jul 2021 (Updated 5 Nov 2021)

In my earlier years, I noticed that there were seldom clear and concise instructions for how to build wealth. There were plenty of self-help books and books on how to budget. However, no one had put all of these things together to paint a complete picture. I did just that when I wrote The Book on Money Management which teaches the three secrets of money management and how to build a foundation for wealth. Today, I want to condense everything down into a wealth building checklist that you can use.

#1 Allocate your after-tax income using the Money Smart Formula.

The Money Smart Formula is part of the Money Smart Allocation system. When you apply the Money Smart Allocation system, you actively contribute 55% of your income to generating wealth. Unfortunately, a typical budget doesn’t set the conditions for building wealth. A budget typically focuses on cash flow each month. Positive cash flow each month is important, but it is not the big picture. The Money Smart Formula ensures that you are focusing your income in the right areas.

#2 Grow your cash flow to maximize the amount of money you keep for investment opportunities.

This may seem like an obvious thing, but many people miss this. Life is good when you have positive cash flow at the end of each month. Life is even better when you have a plan for that positive cash flow that builds wealth. What would you invest in with your positive cash flow? Make a plan to grow your money so that you can enjoy the economic security and freedom of choice that comes with wealth.

#3 Grow your net worth to build a foundation for wealth… Generational wealth!

Building further on checklist items #1 and #2, you should focus on growing your net worth. Consider where you were 10 years ago. How much has your net worth changed since then? Growing your net worth is the milestone for building wealth. Stay focused on growing your net worth and your financial wellbeing will increase along with it.

#4 Invest in assets to grow your net worth. Your assets should grow year over year to produce more income and net worth.

Are your investments growing your net worth at the right pace? It is wise to be selective about what you invest in. This is something that I want everyone to be critical about. While it is important to allocate 55% of your income for investments, your investments should include assets that produce more income and grow your net worth. Selecting the right investments comes with learning, understanding, and practice. Most importantly, selecting the right investments becomes easier when you have a mentor who is willing to guide you.

#5 Build and leverage a team of experts to advise you.

Those who take advantage of financial advisors in their financial planning outperform those who don’t. It’s common sense to consult an expert when making financial decisions. However, many people choose not to consult a financial advisor either because they don’t know any better or they believe they know more than the experts. Regardless of the reason why, the results are predictable. Be Money Smart and leverage the advice of experts.

Get the complete Money Smart Wealth Building Checklist.

So far we’ve covered five of the 10 items on this Money Smart Wealth Building Checklist. Can you feel the difference it makes when you have clarity? Request a FREE copy of the Money Smart Wealth Building Checklist when you attend a virtual coffee with Curtis.

See how much you should save to reach your retirement.

Learn what to stay on track with your retirement goals using the retirement nest egg calculator.

1) Enter your current age in the "Your Current Age".

2) Enter the age you want to retire in the "Anticipated Retirement Age".

3) Enter the amount you currently have save for retirement in the  "Current Retirement Savings".

4) Enter the amount you plan to save each month in the "Monthly Amount Invested".

5) Enter the annual interest rate in the "Annual Interest Rate (ROI)".

6) Click "Calc" to calculate the result.

The Chart will display a chart showing how much money you contribute and how much money is created from interest. The Savings Schedule allows you to see a breakdown of what your finances would look like over time. You may also print the results for your personal record and learning.

See how old you will be when you retire.

Learn what age you will retire at using the retirement age calculator.

1) Enter your current age in the "Your Current Age".

2) Enter your current retirement savings in the "Current Retirement Savings".

3) Enter the monthly amount you will save in the "Monthly Amount Invested".

4) Enter the annual interest rate in the "Annual Interest Rate (ROI)".

5) Enter the amount of money you wish to have when you retire in the "Amount At Retirement".

6) Click "Calc" to calculate the result.

The Chart will display a chart showing how much money you contribute and how much money is created from interest. The Savings Schedule allows you to see a breakdown of what your finances would look like over time. You may also print the results for your personal record and learning.