A Good Foundation Helps Finances Weather Storms
By Scott Chapman, Financial Freedom Boot Camps
A Firm Foundation – Often the most forgotten part, certainly not the sexiest and most glamorous part, but nothing stands without it.
When the storms come, a nice home won’t be nice for long if it is not adequately anchored to a firm and strong foundation. If the foundation is weak, the home will shift and settle. The walls will crack, the trim and moldings will split, and the doors won’t properly open and close. It becomes ugly.
We then realize that our once beautiful home has serious problems. We wanted the glitz and glamour of the nice trim work, cabinets and paint job, so we took the foundation for granted. After all, that is what it seemed everyone else was doing.
However, now we find out that the structure is only as strong as its foundation, and our foundation is weak. The cost to fix and repair it after the fact will be drastic compared to what it would have been if it had been properly done in the beginning.
When it comes to the basic principles of our financial life, it is no different. We often forget about the most basic foundational principles upon which our financial house should be built and we skip right ahead to the glitz and glamour so we can be like everyone else. We simply don’t consider it and think about it. After all, if everyone else is doing it this way it must be right. Wrong!
We fail to understand that there is a huge difference, at the most fundamental level, between the financial elements of savings and investing. The financial industry has done a terrible job of confusing these two things, thus confusing the populace.
The truth is we must build our financial house on a firm foundation of savings. If we fail to do this, when the financial storms come, our financial house built with all of the glitz and glamour will no longer look so pretty. It will crack and split and the cost to us can be devastating.
Having an adequate “safe-money” savings element to our financial plan is of utmost importance, yet most people completely skip this step and go right to investing.
Having a foundation of safe-money savings is something that the wealthy understand and they never quit doing. Therefore their financial house stands the test of time. They have a strong and firm foundation upon which it is built.
Just like a well-built home that can be an asset for the next generation of your family, so too can a financial house that is built upon a strong foundation become an asset for the next generation of your family.
Scott Chapman is a financial planner who runs Financial Freedom Boot Camps that help people build a firm financial foundation.