Do you know people who make lots of money from their job or their business but never seem to have any money? Or maybe they have money now, but they don't have any assets other than their home, their cars and their boat?
I keep running into this situation and I always come to the same conclusion. Making lots of money has nothing to do with wealth. Nor does it seem to have much to do with financial knowledge or wisdom.
Just this week, I was talking to a new client who runs a very successful business. He makes hundreds of thousands of dollars each year, but has more liabilities than he has assets. The reason seems to be that while he has made incredible efforts to make his business successful, he has never devoted the time or energy to learn how to make his investing successful. This is not a criticism of this client. It is a part of our society. We are taught to work hard at our job or our business and to turn our finances over to some financial advisor who may or may not know what he or she is doing.
In addition, this client was given some poor advice regarding his taxes, so he is in deep doodoo (yes, that's a technical term) with the IRS. Now, he has to work even harder to pay back taxes that with proper planning may not have been owed at all. Again, our society teaches us that taxes are too difficult so we need to “hand them over” to some tax advisor who probably only knows a little more than his client. In reality, you cannot “hand over” your taxes to a tax advisor. You have to learn enough of the rules to know when to go to your tax advisor for advice. He or she cannot be with you every minute of the day.
The answer for all of these high-income, low-wealth people is the same. It takes knowledge to be financially (and tax) free.
Remember – Financial Freedom is Closer than you Think – but only if you have the knowledge to obtain it.
Warmest regards,
Tom
