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Understand the Basics

1. Protect Your Todays

Did you know you are a multi-millionaire? Maybe you don’t have that in your 401k plan today, but you have put in the work to create an awesome opportunity for yourself – year after year of high income in your chosen profession potentially for 20 - 30 years or more! That income potential may be worth 5, 10, or even 15 million dollars to you and your loved ones and will be used to create a lifestyle consistent with the hard work and specialized skills you have developed over time. The only thing standing in the way of your bright future is an unexpected event that could take it all away in an instant. A car accident where you are at fault. An injury or illness to your hands that keeps you from being able to work “hands on” with patients. A debilitating disease that robs you of the stamina to run your practice. These risks exist for all people and they can occur at any time without warning. The first step in our planning process is to make sure these risks are protected so your opportunity, your multi-millionaire potential can’t be taken away from you.

2. Become a World Class Saver

One of the traps high income earners can fall into is to become undisciplined with their money. The more money you earn, the easier it is to assume it will always be there to support you. And as you continue to earn more money, your lifestyle will continue to expand as income increases. This can create a situation where you find yourself close to retirement age only to realize you have spent the millions and millions of dollars you have earned over your working career and it is too late to catch up. That’s why it is extremely important to develop good financial habits early in your working career. This starts with understanding the proper priority of your cash flow and becoming a world class saver. Systematic, intentional savings is a cornerstone of a good financial plan and gives your retirement a significantly higher chance of meeting your individual goals.

3. Develop Liquidity for Life Events

This is probably the most counter-intuitive advice we could give you coming out of school. With large student loans to be repaid and big beautiful homes – and mortgages – to be purchased, and 401ks to be funded, it seems all of your new cash flow has been spoken for. But we want you to slow down just a little bit. We have quite possibly 20 – 30 years to get that mortgage paid off and many years to pay down student loans and save for retirement. First things first, let’s make sure there’s enough money in the checking and savings account to pay the bills – even if you go six months to a year with no pay. Having cash on hand is important for financial confidence, but it can also save you in the long run. Cash on hand means being able to pay cash for unexpected medical expenses, roof repairs and new water heaters without having to dip into the credit cards with 20% interest rates. Cash on hand means being able to have higher insurance deductibles which means lower premiums and cash on hand might mean you can go an extra 6 months running a deficit as you get your new practice off the ground. You’ll have plenty of time to pay back the mortgage company and the student loan company, but first, let’s pay you back so you are in a strong financial position to handle whatever comes at you next.

4. Become Debt Free

After you have protected your future income potential from loss, and you have instilled the keystone habit of SAVING first and you have built up enough cash to whether the storms ahead, then it is time to turn your eye toward your debt. I know, I know, this seems COUNTER-INTUITIVE to not tackle the debt first. We get that response all of the time. But whether it is student loans, a car payment or credit debt, we have found that many of our clients are able to pay off their debt by following our system much faster than they would have achieved on their own.

Think of it as a battlefield any sort of triage situation, we are always taught to check and treat vital systems first. This is to avoid catastrophic results. By following steps 1-3 in order we have covered the most catastrophic threats first. The logic is the same here. Take care of the catastrophic first, then worry about paying down and paying off debt afterwards.

5. Live With Confidence & Clarity

The above referenced screenshot including all text, images, graphics, photos, animation and other materials contained therein is taken directly from The Living Balance Sheet® and is the intellectual property of The Guardian Life Insurance Company of America. The Living Balance Sheet® and all its content is the property of The Guardian Life Insurance Company of America, New York, NY and cannot be used or replicated without express consent. © Copyright 2005-2023 Guardian. World Class saver is a Person who saves at least 15 to 20% of gross income.

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