September 23/02

A Wider View
by Marcel Chartier

As an inaugural comment, I figured the best way to start is to actually define my view of myself in relation to practical finances and financial philosophy.

I am an average guy - financially. My income is slightly above average, my spouse's income is slightly below average, so as a family we are average (lower middle class as most people think of it).

I am not wealthy, but I want to be comfortable, at least early enough in my life to enjoy it without worrying about money.

So my goals are to get enough money to be able to choose what I want to do, like traveling, instead of doing what I feel I have to do - like going to work everyday.

And I want to be able to do this by the time I am 55, which is 15 years from now.

Sounds nice. Easy to say but harder to do. But at least I know what my goals are, and that is the first step. Planning for your future is actually pretty easy once you get down to doing it, and the first step is figuring out what you want.

Once you figure out what you want, then you can look at what you need to do to get there.

Getting there is not easy. It does require sacrifice, it does require realism in what needs to be done. I know this as have been doing so for few years now.

Basically it means putting alot of what I earn away into investments. It means living at a lower standard of income than I could live at. It means not incurring debt, and or getting rid of debt as quickly as possible. It means delaying gratification. Apparently the ability to delay gratification is correlated with success. I think, you could add discipline and working smart and hard to that too.

Getting there for me, like many average guys, is going to be different than for someone who is "poor" or someone who is "rich". Actually when you read books or information on how to get wealthy, or how to become a millionaire, its amazing how many authors basically tell you two things, you need a plan and you need to stick to it faithfully. They never seem to tell you exactly how.

They also never tell you how to do this when you are just a working guy, stuck with a mortgage, payments and family obligations.

Advisors also never seem to tell you in a staight forward way how to determine where you are in the economic food chain, which I think is very important.

Most people think they are middle class. Most are not. I read somewhere yesterday that 14 million americans have investments over $100,000. What about the other 250 million? Most are relatively poor in comparison - poor.

Looking after number one takes on a different meaning depending on where you are on the economic ladder. This I know from personal experience - over 24 years of working with people who are on the bottom of the economic ladder. Basic needs come first - food, shelter, clothing. Only after those needs are met can you think about anything else. The worst time to teach someone how to swim is when they are drowning. The best time is after they have been saved, feel safe, have recovered and want to prevent that from happening again.

Unfortunately, if you are at the bottom end of the economic ladder, all you are doing is treading water, feeling like you are going to drown at any time. A little further up the economic ladder and maybe you can stand on your toes to touch the bottom to keep your head above water. A little further up the ladder you and you may have a float device, further up, a dingy, further up a yacht. The threat of going under becomes more distant the further up the economic food chain you are. Heck, at the top you are having a good time in your luxury yacht and swim in the water for fun!

So what does this have to do with building wealth? Accomplishing economic goals? Plenty. If you're at the bottom you need to make more money. If you are at the top, you need to know how to retain your money and make it work for you the best you can - tax stategies and professional complex money management may be what you need.

Too often, the guy near the bottom reads some article that is really for the guy at the top and puts his $500.00 investment money into a weird hedging derivitive fund when he really should be taking the $500.00 and taking some night classes to upgrade his education or training to get a better job where the $500.00 would come back tenfold in a year.

That is why I decided to start to writing on finances and financial planning, I really didn't find anything that was out there for me. The information I found varied from good to terrible, most advice from experts seemed to be aimed at people who where already worth alot more than me. I guess if you are a financial planner why waste time on the smaller fish - aim for the big ones, they are worth more. Its probably just good business, and it is easier to preach to the converted - those who have money looking to make more.

I think the average guy gets ignored.

That's why I take a wider view.