Create generational wealth by using common sense financial practices.
Imagine a young man, almost 20 years old, recently married and earning $58,000 a year before taxes working at a truck repair shop. His new wife, a college student working part-time, brings in an additional $24,000 annually. Remarkably, they already have $50,000 in savings and investment accounts. According to multiple comprehensive financial projections, this couple is on track to retire at 56 years old with more than $3.5 million in investments. These projections account for small, periodic raises over time, a disciplined savings rate and no debt other than an eventual mortgage.
Who is this hypothetical, mythical financial wizard? My son. He and his wife are debt-free: no credit cards, no student loans, nothing. In today’s society, they are financial unicorns to be sure. They drive modest, paid-for $5,000 cars. They aren’t keeping up with friends who have $75,000 in car loans with the subsequent payments that come along with them.
My son and his wife aren’t like some DCs I know (and used to be), who accumulate hundreds of thousands—if not millions of dollars in debt through student loans, lines of credit, equipment loans, business loans, car leases and hefty mortgages on fancy houses. Assuming my son and daughter-in-law avoid the common financial pitfalls that plague many Americans, they are on track for $3.5 million by the age of 56. How is this possible?
It’s simple, though not easy
The power of time, disciplined saving and investing and living below one’s means can create substantial wealth. While many books have been written on growing wealth, let’s start at the beginning with cash flow, budgeting and living on less than we make.
Having a financial plan is crucial. Each dollar should have a purpose. Start each month with a plan using an Excel spreadsheet or a budgeting app to determine where your money will go. Cash flow and budgeting should be proactive, not reactive. This can be challenging, especially when business cash flow is inconsistent.
Reflecting on my own 22-year financial journey, I realize the importance of starting early with simple, disciplined habits, such as:
- Start with generosity/tithing, then saving, then spending
- Providing excellent service to clients; growing a business slowly but steadily is much more effective than chasing shiny objects
- Live below your means
- Avoid lifestyle creep
- Pay off all student loans, car loans and other consumer debt before purchasing the big “doctor home” or fancy boat
- Save as much as possible; you never know when the rainy day will come
- Budget and save to pay for significant expenses (i.e., vacations and cars) in cash
- Build a six-month emergency fund for both personal and business expenses
Could I have completed undergrad and chiropractic school, bought my first car, first house and my business without debt? No, but I wish I would have been more careful with lines of credit, financing most equipment purchases and being cavalier about debt; even if it was considered “good debt.”
Other valuable lessons I learned along the way:
- Debt should be used sparingly and only after seeking wise counsel
- Choose your advisors carefully
- Don’t keep up with the Joneses or your doctor friends
- Be debt free (minus your house) before you purchase extravagances
- Read “The Millionaire Next Door”
My experience has taught me the difference between following the advice of Robert Kiyosaki, author of Rich Dad Poor Dad, who is proud of leverage, and Dave Ramsey, who champions debt-free living. Kiyosaki had a recent interview where he was proud of the fact he was $1.2 billion dollars in debt and said it would be the banks’ problem if he ever defaulted. Contrast this with Dave Ramsey, who many believe is a debt-free billionaire. My guess is that Ramsey and other people who are debt-free have more peace and contentment than those whose debt balances are continually rising.
When I was 19, I had zero money and was about to embark on a student loan journey of $150,000 over eight years. However, when I was in chiropractic school, I started buying properties. This led to a significant net worth on paper, but I learned the hard way that when the economy tanked, circa 2008, you can’t just sell a property in a day. One of our properties took two years to sell. At the time, I experienced the burden of managing five properties with five mortgages costing $18,000 a month. When one of my tenants stopped paying rent, it led to almost an entire year of significant financial strain.
These experiences taught me some valuable lessons:
- Maintain liquidity
- Don’t try to leverage everything
- Have a healthy fear of debt
- Never assume that asset values will always increase
- Always assume your tenants will default at some point
- Be thankful if they don’t
Final thoughts on wealth building
To grow wealth, minimize taxes and leave a legacy, start with solid financial habits. Common sense is king. If you can’t afford to buy something in cash, you can’t afford it. (Your house or potential business purchase would be the exception in my opinion). Prioritize saving and investing early, live within your means and stick to a plan. This approach, while simple, requires discipline and long-term commitment. Be patient. Time-tested financial wisdom, if followed, leads to financial independence and will occur sooner than you think, and there’s more peace without debt than with it.
JAMY ANTOINE, DC, BCN, is a DC with past specialties in peripheral neuropathy and severe disc damage. He has more than 22 years of experience in investing, entrepreneurship and business ownership. Due to his love of finance, investments and good financial behaviors, he retired from private practice and is now using his extensive business experience and knowledge working with The Wealth Group, a nationally renowned, comprehensive, wealth management firm – as a financial planner for business owners, entrepreneurs and motivated families to strategically plan for their financial independence and work-optional date. He is the only DC-trained financial advisor in the nation. For more information, visit thewealthgroup.com, email jamy@thewealthgroup.com or call 615-395-8600.
Disclaimer: The Wealth Group is a securities and exchange registered investment advisor. No content contained herein should be construed as an offer for investment advice or an offer for the purchase or sale of any security, insurance or other investment product. Investments involve the risk of loss, including loss of principal. Please consult with a qualified financial, tax or legal professional before implementing any strategy presented here. Data presented here is obtained from believed reliable sources but cannot be guaranteed as to completeness or accuracy.
