How Having a Plan Will Make You Richer (The Wealth Pyramid) (#4) — Transcript
THE PICTURE OF WEALTH · EPISODE 4
Dustin Serviss introduces his wealth pyramid and the role of a clear plan. He explores the foundations that connect financial decisions with lifestyle goals and future responsibilities.
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Transcript
[00:00:01] Show announcer: Welcome to the Picture of Wealth, a podcast all about living more of your life now yet being responsible for your future. Lifestyle experimenter, wealth scientist, and financial coach, Dustin Service, shares life hacks, wealth tips, and interviews successful entrepreneurs on how they're thriving in happiness, purpose, and prosperity.
[00:00:24] Dustin Serviss: This is mini series one of the seven steps to derisk your personal and professional life. Now it's something I use as a tool in meetings with clients. It's a diagram of a pyramid, and there's basically building blocks that make up the pyramid going up. And at the bottom of the pyramid is, you know, the first section, which is having a plan. Now, again, we call it a lifestyle design or some may call it a financial plan. Now that could mean, you know, a hundred page financial plan. It could be charts, diagrams. Well, we really just summarize it with this simple analogy of what are your goals?
[00:01:04] Dustin Serviss: What has to happen between now and the rest of the year or between now and some specific date for you to be happy with your progress? It doesn't need to be that much more complicated. Think of either, you know, in in these times, what would make you happy with your progress? We can't travel. We can, you know, I guess, we can buy things, but, you know, what certain things do you want to accomplish? Get that down on paper. Write it down. Ninety percent of people will write it down. A large percentage of people do not talk about their goals with their spouse. So one particular strategy I get people to do is write on a piece
[00:01:41] Dustin Serviss: of paper what your goals are, have your spouse write their goals, and then turn the pieces of paper over and let each other see them. Hopefully, there's one or two goals in there that actually line up, and that's what you're gonna go attack first. Spouses that can plan together and set goals together and accomplish things together have higher degrees of happiness and increased probability of success in the long term. So we've got goals. So begin, we're building your lifestyle design at the bottom of the pyramid. We need a nice tight, strong foundation to then build the other things on. But next is Bam, b a m, and that stands for
[00:02:19] Dustin Serviss: bare ass minimum. What are your bare ass minimum expenses? These are the things that still exist regardless if you're traveling. So never mind the shopping and the spending or the... You know, for me, it's snowmobiling. And and if that all goes away, I still have regular bills that exist. We need to know what that is. The reason you need BAM is it gives you a clear indication of how much for one you could save, invest, or try and magnify for the future. And for two, if you're a sole income earner for the family or if your income is important to the family's livelihood, you see if your income went away, how bad that would be for your family.
[00:02:59] Dustin Serviss: Now if your money lasts long enough for you to recover from an illness or injury, perfect. If it doesn't, well, that's consideration for what what would be the strategy then. You know, some would say my parents, some would say, well, my business would run itself. That's for you to answer. Because for most people, disability insurance can be a great form of hedge against that. And some disability insurance can actually be fifty percent refundable every eight years. So if you don't claim, you get half your money back. The final piece of the financial plan is the dashboard. And, again, we have pads of paper at our desks where we would draw
[00:03:37] Dustin Serviss: this out for a client, but you could easily do it on just a simple piece of paper, is write down everything from all of your existing life insurance or existing insurance, all of your savings, all of your real estate, how much is the house worth, what's your mortgage, what's the payment, do you have mortgage life insurance, what's the payment on that? Do you have a company, who are the shareholders, is there debt in the company, what does the company roughly do for revenue. Map this all out, Combine that with all the important things like your dates of birth, your kid's birth date of birth, and now you've got
[00:04:12] Dustin Serviss: this one page, what we call a dashboard. It also includes your accountant, your lawyer, the executor on your will. Do you have a will? Yes or no? You start to see where I'm going and ensure that at the top of the page is your goals. So one year goal, three year goal. We don't need an age sixty five goal. We just need to work in short increments, especially with sort of post COVID. It's... I don't think we're sort of doing planning like we used to where it was a sniper rifle, and we lay out this big plan, and the bullet's gonna fly at a perfect trajectory for the future.
[00:04:47] Dustin Serviss: It now is, you know, basically walking around hunting with the shotgun where you're shooting, reload. Okay. Three months later, reassess, recalibrate. K. How do we pivot? What do we need to do? You know, businesses seem to be stabilizing in early twenty twenty one now, so that could be good for your business. If it hasn't or it's not, then you need to figure out how could we stabilize the income. So recap. At the bottom of your pyramid, you're gonna draw a nice big wide foundation. It's gonna include having your goals laid out, written down on paper, talk to with your spouse. You're gonna go over your BAM.
[00:05:24] Dustin Serviss: Again, we have a cash flow tracker that we can send you or the BAM tracker. Just shoot me an email, and I will send you that in an email so you could just use it. You don't have to reinvent the wheel. It lays down all of your expenses in a nice itemized list. It then takes your income and tells you how much you should have at the end of the month. It also gives you and your partner or you and your spouse a great tool to walk through the expenses together and layout where you're spending your money and make sure that those expenses line up with your goals that you just completed.
[00:05:56] Dustin Serviss: Final step, get all of your existing financial facets down on one piece of paper and call it your financial dashboard. This dashboard then provides the the cornerstone or sort of something you and your spouse or you can, you know, review with yourself each year, each six months and say, okay. Well, there's a gap there. Or when you go to get a mortgage, it will be a great tool for the mortgage broker to get your mortgage faster. When you go to an accountant, it'll be a great tool to have a conversation with. It is the start of setting your wealth trajectory on an upward direction. And that is miniseries number one.
[00:06:35] Show announcer: If you found this episode valuable, share it with a friend. If you found this episode super valuable, leave us a review on iTunes. It will help us continue to bring you top quality content. For more information on anything discussed on this show, visit w w w dot service wealth dot com. That's service spelled s e r v I s s. Any investment topics covered on the show are not investment recommendations, and you should seek professional advice before making any investment decisions. This show was produced by Podgy podcast. Thanks for listening.