When it comes to insurance coverage, many business owners overlook the importance of third-party EPLI (Employment Practices Liability Insurance). In this blog post, we will
What is Real Wealth?
As we wrap up 2021 and we head into 2022, I have a message that’s been weighing on me for the last little bit. And it’s specific to all you producers out there that are having the best year ever. What will you have to show for it when this year’s over? That’s the topic we’re going to talk about today.
Before I even get into this, I got to tell you. I am not a financial planner. I’m not a financial advisor. I’m not a licensed stockbroker of any kind. So I need you to understand that the content of this message is not me giving financial advice in any way, shape, or form. I’m not licensed to do that.
So now that we’ve got the risk management stuff out of the way, I want to talk to you about the difference between income statement and balance sheet rich. I think this is important to differentiate. The younger you are, the more you need to hear this message. It’s not because I’m the grumpy old man telling you young whippersnappers that I know better what to do with your money than you do. It’s the way mathematics works and how compound interest gets calculated.
See, we don’t have excellent role models in society for accumulating wealth. I mean, we’ve got a few, but if you look at the people that the younger generations are attracted to, these are not people who are wise with their money. They’re pretty foolish. Why do we have so many athletes going bankrupt after they retire in short order? It’s because they didn’t intentionally tell their money where to go. See, money itself is in an inanimate object. It’s emotionless. It doesn’t have mental capacity. It’s only going to go where we tell it to go. And that’s why it’s essential to have a budget and direct your dollars where you want them to be. It’s also crucial that you have someone to hold you accountable.
Find a Pro
My good friend, Erik Garcia, Garcia Financial Services, would be an excellent resource for you because he understands the insurance agency model. He understands producers. But most importantly, he understands, as Mr. Wonderful would say, money. He knows how money works. He understands the difference between income statement rich and balance sheet rich. See, here’s the thing, income statement rich can fool you because it’s all about how much you have coming in. It’s about your income, your expenses, and how much you have leftover, if anything, so you can make a lot of money. You can have a ton of money coming in without accumulating any wealth because you spend it as fast as it leaves. Now, listen, if you followed me for any time, you know I am all about rewarding yourself. You have to set the goal of the thing you want, and you have to work your tail off to achieve the goal. And then you reward yourself by buying whatever it is that you wish to or treating yourself to something.
It might be a day off. I don’t care. It’s whatever motivates you, but I’m never going to be the guy who says don’t buy the BMW. Don’t buy the Rolex. Don’t buy the Cartier. Don’t treat your spouse or your significant other to that lovely piece of jewelry. I think you should do that. Otherwise, what’s the point? But if you’re only income statement rich, then you’re not doing anything to build wealth for the long term. And that’s where the balance sheet comes in.
Know Your Balance Sheet
The balance sheet is what houses your asset and everything you invest in with that money from your salary, which is excess at the end of the month. True wealth gets built on the balance sheet, not the income statement. And with the way compound interest works, if you can understand that earlier in life, you’re going to be way wealthier when you get older. As we go into 2022, I would encourage all of you to consult with a financial professional. Whether it’s my friend, Erik Garcia from Garcia Financial Services, or someone else, I think you need to do that. You don’t have to be rich yet to get a financial planner. Many people get their wealth because they have someone who puts a plan and holds them accountable for executing that plan. Make that a priority in 2022.
The one thing I don’t want to see with all of the up-and-coming talents in our industry is just throwing their money down the drain because they want to keep up with all of the rappers and everybody else that they follow YouTube sensations. There’s another good one for you. How’s that going to work out in 20 years when we’ve spent all of our money on stupid crap and liquor? All I’ve got to tell you is focus on the balance sheet in 2022. And in 10 years, you’re going to be looking for me to thank.
We all have choices, as do our clients and prospects. Having deep roots in customer service, I am still a student of the game at
I hear it all the time, “David, I just don’t believe there are people on every corner waiting to hand out their business to you