B-SCHOOL HIGHLIGHT: Knowing What Financial Freedom Means to You


This isn’t necessarily real estate-related, but I want to take you through an exercise and spreadsheet that I created in Google Docs. It’s “Financial Freedom” and so I want to talk about Knowing What Financial Freedom Means to You.

Forming a Wealth Creation System

I consider my business to be my wealth creation vehicle. I know a lot of real estate agents that are selling real estate way past the point where they really want to be selling real estate. So selling houses into your real estate into your retirement years - this should be a choice not a necessity. I’m working with a client now who’s 42 years in the business. This is a private consulting client: her husband’s working 7 days a week and she’s working 6 days per week. They’re both in their 70’s and they don’t have the money they need to retirement.

It’s sad, they may love real estate, but I don’t know anyone that loves real estate that much where they’re going to be working into their 70’s, working all hours of the day and night.

Making money and saving money are two entirely different things. You must automate your wealth creation. I have a system - and I do this for the multiple businesses I have where each business contributes to a wealth creation account. I have all my accounts with Wells Fargo, and they all give money to a wealth creation account and a tax account. I put $25,000/month into a wealth creation account, and I put like $15,000 into a tax account every month. My tax account is building, so when I do my quarterly payments, I’ve got the cash there. And my wealth creation, I take money from that account and I give it to my money manager on a monthly basis. I have to automate that process. This process is automated.

Managing a Living Balance Sheet

Your Net Worth is not the only score. Obviously relationships, your faith, your health, and all those things really matter a lot. So your net worth is not the only score that matters, but it’s a big one when it comes to planning your retirement years. Thats the Scorecard that I use when I measure the effectiveness of the time that I dedicated to business, or to working.

The Scorecard is how much money did I put in the bank this year. My goal is to put $300,000 after tax into my wealth creation account, into this vehicle that I’ve created. My goal is to put $300,000 away each year, and it’s a deliberate plan, I didn’t start at that number. It’s to live an amazing lifestyle and to put $300,000 away each year.

I work with a money manager who has a living balance sheet, so I constantly know my net worth. I have a goal of having $8M liquid by the time I’m 55. So 14 years from now, I need $8M to have the choice of retiring and not having to work at all if I live until 90, I think is the age that we picked. You have to be able to make those conscious decisions. You have to know what your personal balance sheet says about you; all of your financial decisions are on there.

I’ve realized over the last handful of years as I’ve built a team and interacted with a lot of people, that personal responsibility is just huge with me. All of the decisions that you’ve made, all of your financial decisions are on your balance sheet.

When you look at your net worth and your ability to generate income, the decisions you’ve made are on there. If you’re a solo practitioner and you’ve got leads coming in that you’re not calling, that decision not to prospect is going to impact your financial situation.

So just know that is one scorecard that is unbiased. It’s too easy to say money is not important or it’s not the only measure and I totally get that. I have faith above everything else, and have family, my wife first, my children, and I’m a good son, and a good brother, and I’ve got friends. All that stuff is extremely important, but this is the one measure that’s pretty objective.

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