Do you have dreams for your future? Do you want to buy a house someday? Maybe you’d like to be the CEO of your company? Or, maybe you’d like to own your very own business and work whenever you want to, rather than living by someone else’s watch. Whatever the case may be, I’m sure that you have thought about what it might take to accomplish these dreams, but have you ever thought specifically about wealth? Have you ever thought about the unknowns that might be lurking around the corner? Based on your planning today, your financial picture in the future could be massively different than what you expect, for the good or the bad.
The Unknown Bad
There are always uncertainties in life, we all know that. We can try to plan ahead as much as possible, but there are always scenarios that we never even considered. Car accidents, hospital bills, termites, we just don’t have a clue about these things until the unthinkable happens and we’re affected by them. The only combative measure….. sit on a huge sum of “just in case” money. There are some pretty terrible things that could happen in your life, and while I wouldn’t wish that they happen to anyone, they do. I recommend that everyone, once they have paid off all of their consumer debt, should set aside about $10,000 into their emergency fund.
What if you don’t?
While it sounds all well and good to have $10,000 sitting in an account for emergencies, many people just don’t do it. Why not? First of all, it’s 100% boring! There’s absolutely no risk when money sits idle in a savings account. It’s just no fun! Second, there is no immediate, visable benefit to your savings. As far as you can tell, this money is earning practically no interest and could really be doing more good in some kind of mutual fund or something… but you really shouldn’t take that risk.
If something bad happens and you don’t have that money readily available, you’ll most likely have to pay the bills with money you don’t have. In other words, you’ll have to pay interest on your borrowed money. And, since your loan was incredibly last minute, the interest rate is most likely far higher than what it could have been if you shopped around. The wealthy do not borrow money from the bank for emergencies. They simply withdraw the money from their account, pay the bill, and then move on with their rich lives.
The Unknown Good
This is how most wealth is created, and it’s really quite simple. Put cash aside for the unknown opportunities in your near future! There are wealth opportunities around every corner, but if you don’t ever have any cash, you’ll never be able to capitalize on them.
Let’s say that you’ve always wanted to own a bed and breakfast on the lake. Suddenly, you see a “for sale” sign in the front yard of a beautiful property that you’ve been eyeballing for years. Their asking price seems unbelievably low, so you check it out. Apparently, the owner received a job offer across the state and needs to sell the house within the next week. By running a bed and breakfast in this house, you figure that you could easily earn $150,000 per year in profits. The only question is, “Do you have the $20,000 necessary for the downpayment?”
If you do have the downpayment, you could soon be rolling in the cash and be well on your way to a wealthy future. If you don’t have that cash set aside though, you have no choice but to pass on the amazing offer and remain a lower-middle class citizen.
Don’t let opportunities pass you by. Keep a large amount of cash handy and you’ll soon see that pot of cash grow and grow with your future opportunities!
Do you have any examples where opportun
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.