In Financial Planning, Consider Your ‘Fuel Tank of Capability' - Replay

My name is Brian Scribonia and on this episode of the Common Sense Financial Podcast. In other words, how do you know if you're winning? When people are measuring how happy and successful they are, their list often goes beyond finances and includes such things as family, friends, faith, fitness, free time, and finances. And while we may all have access to varying amounts of cash, we all have a finite amount of time to achieve our goals in an average 24 hour day, 30 day month and 365 day year. How much do you want to allocate for each of these areas? What will it take to make you happy and successful in your relationships, your faith, your health and your life?

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Opportunities are still there. The attempt at passing down wealth from generation to generation. Consider the outcome, not just popular opinion. And the whole teaching there is about.

Preparedness and being ready.

There's a difference between what's real and what's true. You're listening to the Common Sense Financial Podcast. I'm your host, Brian Scribonian. Thanks for tuning in and let's get into today's topic. One of the hardest lessons I've ever had to learn is that we as human beings can only do so much. And this is a lesson that applies to every aspect of life, including financial planning. Physically, we can only do so much before we need to rest and recharge. Mentally, we can only take on so much before we become overwhelmed. Practically, we can only do so much with the time, talent and treasure we possess. Just like a vehicle has a literal fuel tank that will take you so far before you need to refuel, we all have our own fuel tank of capacity. How much you can do and how far you can go is entirely dependent on the capacity of that tank. One of the most common missteps people make with their personal finances is simply trying to do too much with their resources. For example, many People want to pay down their debt, save for their children's college, save for retirement, pay off a mortgage, cash flow to fund home improvements, pay cash for vehicles they want to focus on and tackle everything. And while these things are all great goals, it's simply not practical to try to accomplish all of this at the same time. Most folks just don't have enough resources in their fuel tank to take it all on. It is not only difficult to stretch enough resources across so many tasks all at once, but some of these goals, they can actually work against one another. And here's why. People tend to segregate their financial goals into silos. They see their mortgage as something to pay off, while seeing their retirement as something totally different, when in reality these are all part of the same conversation. And they may overlook possible opportunities that exist by using a more strategic, more broad approach. There are many reasons for this propensity to oversimplify, but what I know to be true through my years of experience is that people will inherently gravitate towards what's easiest over what is often best. For instance, the idea of paying off a mortgage seems reasonable with all the interest saved on a mortgage, right? But what is often overlooked is the opportunity cost of accelerating the mortgage. The money needed to accelerate the mortgage could be invested over time to create a more favorable result, considering the home will appreciate regardless of whether you have a mortgage. And if you're using your extra resources to accelerate a mortgage, it takes resources away from the other mental silos, such as home repairs, kids, college, new vehicles. And when these expenses inevitably come along, the bank often fills the money gap. And then you find more of your resources being absorbed into making payments, and then the problem gets compounded. You see, there is an even bigger picture to all of this, and that is where the opportunity lies. The older I get and the more conversations I have with people, the more I'm convinced that if you truly want to maximize your capabilities, the focus should be on building resources and then creating cash flow from those resources to fund everything. And the reason why I feel so strongly about this is because once you spend money, it's gone forever. The opportunity cost of money spent is the loss of potential income stream in the future. People can make large amounts of money, but if they spend it even by paying down debt, they will continue to have to create new income to replace it. And when you break this down to the most basic aspect of your entire financial picture, you find that you can do without pretty much everything. But you have to have income, ideally passive income, because this is what frees you from having to trade your time for money? If you work for a living, you do your job in exchange for a paycheck. The cash flow from that paycheck supports your lifestyle. Beyond the paycheck, the time you're trading is the most precious resource, not necessarily the money. Your time is irreplaceable. It is in limited supply. So why not reverse the system and figure out a method for trading your money for time? This is where passive income comes in. It fills your income gap, allowing you to free up your time. If people would focus more on building cash flow instead of spending and using a silo method of allocating their paychecks, they could see that having an ongoing passive income stream offers them time freedom. In my experience, I find that people get caught up in their silos and find themselves beholden to their system of working to spend. The truth is that people can live without saving money and they can live with debt, but they cannot live without cash flow. The even bigger picture here is how you measure financial progress. When it comes to determining how you'll use your resources available to you, you should ask yourself, what is the most important metric to track when it comes to wealth and happiness? In other words, how do you know if you're winning? When people are measuring how happy and successful they are, their list often goes beyond finances and includes such things as family, friends, faith, fitness, free time and finances. And while we may all have access to varying amounts of cash, we all have a finite amount of time to achieve our goals in an average 24 hour day, 30 day month and 365 day year. How much do you want to allocate for each of these areas? What will it take to make you happy and successful in your relationships, your faith, your health and your life? Once you figure this out, you have two options. Option one is try to do everything yourself. If spending hours researching, implementing, learning everything about how to improve your relationships, how to improve your health, how to improve your finances by trial and error. Sounds fun. Then this is the option. Obviously, just be careful because doing it wrong may cost you more than you'll save by doing it yourself. And while you may excel at one subject or another, it's pretty unlikely that you will ever be as knowledgeable as a counselor, a pastor, a doctor and financial professional. All knowledge compiled together to make a professional level decision that impacts your life and everyone around you. And furthermore, within each of these areas of expertise, there are a variety of different philosophies, strategies and tactics you can use. And without the appropriate education, training, context, and experience, it could be difficult, if not impossible, to know which is the best for you. This is especially true when you consider the fact that absolutely none of the advice you'll you'll read, you'll Google search, experiment with ChatGPT, or hear from your friends will be tailored to your unique situation. It is beyond comprehension how anyone can be an expert with everything from preventing disease to building a portfolio. There's just too much at risk, and it's a big deal. Option number two is delegate. In Stephen Covey's book the 7 Habits of Highly Effective People, he explains that the happiest and most successful people have figured out how to buy more time by relying on professionals with the knowledge and the experience to help them manage their relationships, health, time and money. It's really quite simple when you think about it. Wouldn't you rather spend a thousand dollars to pay a lawyer to create a will or draft your power of attorney or set up your trust rather than spend 100 hours trying to do it yourself? Even if you could complete the task for $0, which is highly unlikely, isn't your time worth more than $10 an hour? Plus, wouldn't you rather spend those hundred hours with your family or working in your hobby, or working on your health? The people who answer yes to that question understand that paying a professional is an investment rather than an expense that allows them to spend more time doing what they feel passionate about and enjoying the time with people that they want to surround themselves with. In Tom Rath's book Strength Finder 2.0, he explains that successful people tend to leverage strengths and delegate weaknesses. They spend their time on the things they are good at and want to spend their time on, and they delegate the tasks they can gain more time from by not doing it. When it comes to important financial matters, having a virtual multifamily office is a way to delegate the heavy lifting of financial planning away from yourself. By having a team of professionals navigating the financial complexities of life, you free yourself from having to spend valuable time doing things that someone else could probably do faster and more efficiently. And delegation frees your time and allows you to spend time doing the things that you love. You can learn more about whether a multifamily office is right for you by taking my Family Office Quiz@brianscribonia.com Family Office Quiz that concludes today's podcast. Thanks for listening to the Common Sense Financial Podcast. Thanks for listening to today's show. If you liked what you heard, be sure to subscribe on YouTube and Spotify so that you can receive notifications when we release new episodes. I'm Brian Scribonia and this is the Common Sense Financial Podcast. Foreign.

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