If a person doesn’t know how to manage a million dollars, I virtually guarantee that the money will quickly disappear, if a millionaire wrote a non-millionaire, who is not well versed in finance/money management, a check for $1,000,000 right now. Approximately 90% of lottery winners go broke within five years, because they don’t have the basic discipline/know how to handle the money that would have created a financial foundation, that would last for generations.
Give a millionaire a dollar, and they will do something predictable: They will display the discipline not to spend it. That dollar will be deposited into a savings account where it earns interest income. A millionaire does not spend earned income! They only spend the income from their investments. A millionaire cycles money from a job, overtime pay, bonus, etc., into investment accounts. When you start out, you probably don’t have any investments so how are you going to pay your bills? Reject the saying: “Try to save some money after you pay the bills each month.” This rarely happens and may be too little to add up too much. That saying is psychologically backwards. The new saying that I you want to begin with is: “Don’t invest all of your earned income each month, pay a few bills with it.” Do you see the millionaire difference?
Let’s talk about financial building blocks. Give a millionaire a dollar and they will split it up into the distinct building blocks of a solid financial foundation. Ten-cents of that dollar will be allocated to a permanent investment account that is never spent. This account builds your wealth. As I have said before: “Wealth can only be created and maintained by the amount of money that you receive and do not spend.” Well, this is that account, and you need to increase it by a piece of every dollar that you receive. Another ten-cents will be allocated to a savings account. This is a delayed-spending account for expensive purchases such as vacation, home repairs, or cars.
Millionaires save money to buy something before they purchase it, not afterward on credit, where you have to pay interest. The next ten-cents is allocated to wealth education. The economy is always changing, and you are ultimately responsible for directing/managing your money. The only way to do this wisely is to add to your investment knowledge. Get investing ideas by paying for advisors, books, courses, newsletters, magazines, and newspapers. The three-dimes that were just allocated for different purposes is the wealth formula of millionaires; this is how wealth can be built to last for generations. It is only after these three buckets get their share of the dollar that part of it is allocated for taxes on that dollar. Notice that a millionaire pays the taxman after the important building blocks get their share.
There is no such thing as “income before taxes”. There is a tax liability on all income, from all sources. So, a millionaire will have a tax strategy in place to receive that dollar before it is ever deposited in the bank. Millionaires don’t overpay their taxes, they manage tax liabilities because they are your single largest expense. If you added up how much you pay in income taxes to the IRS, state, city, and property taxes, it is probably a much larger number than you think. Some ways to minimize your taxes include setting up a part-time business to create tax deductions, buying investments that offer depreciation, like real-estate and oil & gas, and finding the best CPA(Certified Public Accountant) to give you advice.
The managing-a-dollar formula that the millionaires follow is: minimize the tax liabilities, allocate parts of it to build your financial foundation, decrease the percentage of earned-income that you spend until it is zero, and forge the discipline to consistently follow this routine. Now, at what age do you wish that you had learned this material? At what age do you think you should start exposing your children to these ideas? The correct answer is, as early as possible! It is never to early to start
One of The Biggest Myths Known To Mankind- “Money isn’t important.” – https://www.mastersofmoney.com/oneofthebiggestmythsknowntomankindmoneyisntimportant/