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Begin with the End in Mind

Philip Brewer

The late Stephen Covey famously wrote, it’s always best to begin with the end in mind.

Suppose you are experiencing financial success…you are growing your wealth. Fine. But why? What is your purpose for building up wealth?

Sometimes when I ask people this question they look at me as if I’d just ask them why they are taking the time to breathe. “That’s just what we humans do!” they would seem to be thinking.

But I want you to think about something…

Wealth has only a few ultimate uses: it will either be consumed, or it will create an income stream. Everything else is just preparation for one of those two ultimate ends.

Suppose you were offered an opportunity to pay $10,000 for an asset that would grow 20% annually, tax free and without risk. Your $10,000 would grow to over $60,000 in just 10 years. After 20 years, it would be worth over $380,000. Over a 40 year working career, it would be worth over $14 million!

That sounds pretty good (actually, it sounds like a Ponzi scheme, but we’ll suspend judgment for the sake of making my point…).

But there’s a catch – you can never spend any of the money. You cannot get an income from it, nor can you sell or exchange it for anything else. Yes, it’s yours. But you cannot really do anything with it. So what do you really have?

Well, you have nothing if you cannot exchange that wealth for something else of equal value or turn on an income stream from it.

All the money you ever earn in your lifetime will either be consumed now, consumed later, preserved to create an income stream for yourself or passed on to someone else.

This is one of the many reasons why financial planning is so critically important to your long-term financial satisfaction.

It’s not enough to make your balance sheet bigger and bigger each year. Business owners often feel good if they see the value of their enterprise growing each year.

But what plan do you have to turn your growing assets into productive assets when that time comes?

Are you unknowingly painting yourself into a corner?

All money gets spent one day. What’s your plan now for spending yours later?

It might be a good idea to begin with this end in mind.

Byron is a Certified Financial Planner and Managing Director of the Planning Group at Argent Advisors, Inc.
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