How To Build a Wealth Plan

Do you know the secrets of the Wealthy? Do you know the top FIVE things wealthy people do that make them wealthy? Do you know the secrets to building a Wealth Plan for yourself? HOW-TO Build a Wealth Plan for your financial security Having represented thousands of clients over my more than 30 years in tax practice and having developed a unique business model that targeted wealthy clients to help them keep more of their money by managing the tax impacts of their business and personal financial life, I have learned over the past eight years that wealthy clients have some very common traits that everyone could benefit from using in their own financial life. Create Multiple Streams of Income One important trait is that every wealthy client has multiple streams of income. Those different income streams all have different tax character: ordinary income, passive income, capital gain income. And they have the ability to better manage the tax impacts and make financial decisions that in effect allow them to not only create more streams of income but have them taxed in many cases at the lowest levels possible. Start and Own a Business Every wealthy client I know or represent owns at least one business and many have multiple business interests. Even if they do not own 100% of a business, I see ownership ranges between 10% and 70% in very diversified businesses that allow them to generate multiple streams of income. If you do not own a business, my advice is first to START A BUSINESS and learn what the WEALTHY have done for many years to become wealthy! Set aside a percentage of every dollar Every wealthy client I know has a RESERVE plan for every dollar they have in income. Setting aside 5%, 10%, in some cases, even 20% of every dollar is POWERFUL! Read my favorite book “The Richest Man from Babylon” to understand the centuries old secret to WEALTH. You should have a personal reserve plan as well as a business reserve plan for every stream of income you have or you should have a reserve plan for each. For example, you own a rental and every rent dollar you collect, you reserve .40 cents of that dollar (40%). We have a very low mortgage so our monthly cost is about 1300.00 and our rent about 2800.00. Given enough time, we will accumulate significant funds in reserve that allow us to leverage that money and invest further. Have a Debt Management Plan Debt has a place and purpose in both personal and business financial management. However, Wealthy people also have a debt management plan and understand the debt to income ratios for personal and business debt management. Short term debt, long term debt, lines of credit all make up the composition of debt. The debt management helps you plan effectively to use the money of lenders to leverage your ability to build wealth while not allowing your financial life to be consumed by the burdens debt can bring with no plan. Taxes and Wealth Every wealthy person I know and client I serve uses the tax code to maximize their ability to build wealth. Taking advantage of the tax codes is not new. Unfortunately, very few professionals have the qualifications to properly manage tax planning and use the tax laws to favor a client. Learn as much as you can about HOW you are taxed and don’t worry about how OTHERS are taxed. Knowing your taxes and tax situation is critical in using the tax laws to add to your ability to build your wealth. Define your financial security Both in terms of your business and personal life as well as your future, it is important to consider what you have done to define and build your financial security plan. Wealthy clients have a business financial security plan as well as one defined for personal and future financial security. Again, using the tax laws to your benefit, you would want to begin defining what exactly your financial security should look like and what it should include. Business succession planning, premature death, disability and liquid reserves are but a small part of the financial security blanket that should cover your business, personal and future financial life.