There exists a difference of time planning between each of the different levels on the socioeconomic ladder—how one views today, this week, this year, this decade and so on.
At the very bottom of the economic totem pole are the very poor. Their plight forces their attention to making ends meet today. The mantra becomes a hardened one day at a time. In this group, you would likely find beggars and day laborers. They typically earn less than $10,000 per year.
The next level would be those earning $10,000 to $25,000 per year and would be considered poor. They live paycheck to paycheck, barely making ends meet. Their focus is getting from week to week.
The middle class earns approximately $25,000 to $100,000 per year and focuses on monthly payments. The mortgage, car payments, credit card bills, and all the rest needed to create comfort. It is said the key distinction between the rich and middle class is the fact the middle class tend to focus on comfort while the rich focus on freedom.
The rich are in a different focus level than all of the other groups because their focus is year to year and decade to decade. Because of their attention to a longer time horizon, they create plans to maximize financial plans, minimize taxes, and create a sound financial future.
What makes this information useful, in my opinion, is regardless of the economic group you are in, the key to improvement is simply plan longer term than you currently are.
Say you were in the middle class and wanted to start to improve your financial situation and leave the debt payment rat race. The first step would be to sit down and write a one-year financial plan followed by a five-year plan. You then would exercise discipline and carry out your one-year plan. This would take the attention off of just making the monthly payments to possibly eliminating the debt all together.
The reason longer term planning works is because it creates direction and focus. It also creates certainty because you have thought out what you want and why in advance.
In closing, I would like to say I hope you find the value I have in forcing longer range planning in the key areas of your life. This concept must be consciously applied to improve health, relationships, money, and any other area of life you feel is important.
John P. Duncan is President/Founder of Gold Leaf Advisory, a comprehensive wealth management firm located in Mesa. He is an author, speaker and sought-after expert in retirement planning and implementation. His practice is designed to provide objective advice to individuals and businesses with net worth above $1 million. For more information, send an e-mail to info@goldleafadvisory.com.
UPCOMING EVENT:
John P. Duncan, President of Gold Leaf Advisory, will host a presentation entitled How to Survive the Current Economic Realities on Wednesday, March 13, from 6 to 7 p.m. at Bogey’s Steak and Seafood Restaurant at Las Sendas Golf Club.
The presentation will be followed by a gourmet dinner.
Space is limited. Please RSVP by March 8, at 5 p.m., to Emily at (480) 285-1998.
The event is free of charge. Topics covered are best suited for those with assets of $1 million and more.
Las Sendas Golf Club is located at 7555 E. Eagle Crest Drive.