Build A Margin For Error And Opportunity

Have you ever given any thought to how high level athletes can do what they do.

Football players can run fast, change direction with one step, and get pounded by a linebacker and stay on their feet. Skiers can put the skis within a centimeter of where they want at very high speeds. And then there are gymnasts. Their grace, balance, speed, and creativity amazes me.

What do they have that lets them do it all. 

One thing is common to all. They have a very high strength to weight ratio. They can do whatever they want using only a portion of their limit. They have a reserve. Another gear as one golfer explained it. They use that reserve primarily for balance and recovery from error.

They can achieve excellent results at 70% of capacity. They can dial it up when they need to.

Financial independence works the same way.

You need some reserves. You get those by running your life at a percentage of what’s possible. Take a pro golfer I always liked watching, Tom Weiskopf because he played at about 70% of maximum on every shot. More control. Another gear when he needed but less control. Sometimes you have to risk it.

Using financial reserves.

Reserves give you choices. You can take advantage of opportunities that come along.  You can help others. A reserve gives you a margin for error. People soon learn that not everything works. You can survive an unforeseen change in your context. Even a catastrophic one.

If you end up not needing the resources and reserves to support you own life, you can give your children and grandchildren a leg up on their lives.

Pay some attention time. Money that someone might inherit at 60 is worth much less than is a quarter as much received at 30. People spend the first 25 years of their working life getting out of debt. Student loans, car loans, and mortgages. Money at 30 buys time. Out of debt 10 years sooner is a huge advantage.

The bit to take away.

  1. Financial independence requires a reserve
  2. You get a reserve by having a satisfying life on less than 100% of your earnings. I know a very wealthy individual who spent the first 10 years of his career spending as little as possible. By year 10 he was using about 20% of his income and investing the rest. 30 years later he is spending still about 20% of his income. Now that lifestyle runs about $100,000 a month. And the reserve is still growing. Quickly now.
  3. Teach the value of building not spending. If you do that, helping your heirs sooner will be easy because they will know what to do with it.

There is a fine line between success and failure in life.

Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”

Charles Dickens in his novel  “David Copperfield”

You know it’s true.


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I build strategy and fact-based estate and income plans. The plans identify alternate ways and alternate timing to achieve both spending and estate distribution goals. In the past I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning, have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, Banks – from CIBC to the Business Development Bank.

Be in touch at 705-927-4770 or by email to don@moneyfyi.com

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