What is My Financial Strategy?
Business as usual is a myth in the current in the world of personal finance and has been for a long time. Let’s explore some of the things believed to enhance your financial health. You may not agree with what I am saying. Keep reading, do a little research, and then make a judgment on the things declared in this posting about your finances. The idea is being able to ask, WHAT IS MY FINANCIAL STRATEGY
First thing is to understand commonly held beliefs.
Go to school, get a good education, and get a good job with benefits
It takes money to make money
Live below your means
It is necessary to examine these and statements like these that have been passed down for generations. I will examine the first one in this posting and two others in the future postings.
The first statement on the surface seems harmless. The question can be asked how can going to school then getting a good education and getting a good job be bad. This is okay if the goal is just to work for someone else and trust that all will work out for retirement via the 401K. As far as leading to financial wealth there is a low percentage success.
One of things to understand is that the school system functioned to produce workers, managers, military, and professional support of the three areas (lawyers, doctors, professors, and teachers). This was for purpose keeping the corporations moving forward. This was the creation of the middle class.
At one time this strategy, though extremely slow would work when you found a job during the decades when the job economy was manufacturing base. Pension plans, profit sharing, accrual of paid time off, and the high wages created a growth economy. This was a time when layoffs were not the instrument corporations used to strengthen cash flow.
Since that time period many things have changed. Two events shaped the personal financial future of most Americans.
That is the in 1971 the dollar was removed from being backed by gold. This allowed the federal government to begin to print currency at a runaway-rate that brought devalued currency already in the system. This effect was a result of currency was no longer backed by the finite amount of something with intrinsic value (a resource that carries its value in and of itself, like silver or gold).
The next event was the 1973 law of placing retirement investments in the hands individual retirees. This was the introduction of 401k, IRA’s, and like financial products that were to take the place of corporate pension and profit sharing plans. The greatest weakness of this idea was that the financial decisions were no longer made by managers who were trained, experienced, and incented to make the most money possible. This was the strength of pension plans. Also these managers could decide to invest with greater options than a 401k provides.
What we miss is the expertise provided by these fund managers that were dedicated to turning a profit for the pensioners. Were you educated to make these types of decisions among a limited choice of investment products?
Another thing that ceased was the idea of staying with one or two companies for an entire career. It became acceptable to possibly work for 5-10 companies in a career. This was further provoked by the use of downsizing (planned terminations) to save payroll cost as a result of moving manufacturing of goods outside of the USA.
Begin to ask yourself this question as you continue reading, WHAT IS MY FINANCIAL STRATEGY?
