Locally based CPA firm since 1956

When kicking off the new-year, I always take inventory of my assets and liabilities, checking them against my records from the previous year. This is my way of keeping financial score.

When I was in college back in the 1980s, I had a business professor who, in addition to teaching, owned rental properties and a small cigar shop. An entrepreneurial spirit, he would tell us college kids that our goal should be to double our income every 10 years and in doing so, triple our net worth. It doesn’t take much to figure out that meant, while increasing income, do not increase outflow proportionally.

That said I began measuring both every year. Aside from the early years of marriage and kids, the outflow has never ramped up faster than the income. I have always been able to maintain the ratio that my professor advised. During my annual financial inventory, I also reflect on my financial goals for the year ahead. Below are a few of my lessons learned over the years. As you read on, please know this, I am not smart enough to invent these rules. I am smart enough to glean information from other, smarter folks. I would give credit to the source if I could remember where I learned these things along the way but, as one of my clients recently said, “We are closer to death then we are birth.” At some age I began to forget the lesson sources, I just simply know them.

My lessons to focus on for financial success:

1. Develop an entrepreneurial mindset- my professor was a landlord and cigar shop owner. In college, I was a manager at Burger King and owned a lawn service with a couple of employees. Weekends were spent finding new customers, collecting payments and repairing lawn equipment. I also bought a couple of old beater cars, spruced them up a bit, and sold them. On one occasion I sold the same car 3 times after repossessing it from folks who did not make payments! People who are entrepreneurial tend to diversify their income and portfolio, and also seem to understand investment selection better than those who are not. How are you an entrepreneur?

2. Start small- set both short-term and long-term financial goals. My small, short-term goal, when I graduated college was to get paid my age times $1,000. So, at 25, I wanted a job that would pay me $25,000. My first job out of college paid me $29,000- success! Small goals for you could be:

a) start contributing to a retirement plan
b) increase the contribution to an existing retirement plan by 1%
c) set up an accountability partner and discuss financial decisions quarterly

3. Write down your goals- research shows that a visual reminder of your goals makes them more meaningful and makes achievement at least twice as likely. Maybe one of your long term goals is owning your own home or a lake house. Write it down, write down the cost, write down how much you need to save, cut a picture out of a magazine and put all that together in one place. Each month look at this montage. Keep it top of mind. When long term goals are kept top of mind, it prevents impromptu decisions like buying a new car when my old one is just fine. Personally, I have 1 year, 5 year and 10 year goals.

4. Pay yourself first- if I had a nickel for every time my Dad said that to me I’d have a barn full of nickels! Contribute to your retirement plan first. Put aside money into a savings plan second, and then pay your bills. Some folks treat their savings account as a place to save for a specific purchase. I believe that’s a third bucket. My savings bucket is money set aside that I won’t touch until I retire. I do not want 100% of my retirement income to be from retirement plans and social security. Therefore I have a “never touch it” savings account and I put a little aside into that account each month.

5. Back to the entrepreneurial mindset- reinvest profits. If you own a rental home reinvest into that home so the maintenance doesn’t kill your profits. If you own stocks that pay dividends, reinvest those dividends into another stock. You aren’t living on those dividends now; so don’t start taking the dividends out of the account. It is a hard habit to break, but if you recondition yourself now, you’ll be in a better financial place later.

6. Minimize debt and borrowing- although I did a lot of things in college I would not put on paper, one of the things I am most proud of is that I completed college without debt. True it took me 9 years to complete a 4-year degree, but I could not afford to attend college full time. True, when I graduated college I was driving a 1978 Ford pickup truck with 318,000 miles. True, when called to interview with AT&T, 180 miles away, I had to ask my uncle if I could borrow his vehicle because I didn’t think my truck would make the drive. However, I had no debt. My folks paid for the first two semesters in 1981, after that it was all on me. Tough maybe, but I didn’t notice. It was life. I got through it and with the grace of God, some help from mentors along the way, and a few lucky brakes, that extra 5 years didn’t set me back so far that I couldn’t catch up.

7. Live simply- my first mentor in the financial services business said it best, “Live on less now so you can live on more later.” A great example of this is Warren Buffett. He lives in the same house he purchased in 1958 for $31,500. Suffice it to say, he can afford nicer digs but has trained himself over the years to live simply and that habitual lifestyle has served him well. The lesson learned is that if you build a lifestyle that affords you to excess cash flow you can have choices later in life.

8. Surround yourself with good people- I can’t emphasize this one enough. It is smart to hang out with smarter, wealthier, people with good behavior. Always remember that the people in your life can motivate you to do good or bad. The day after graduation from college my boss, the guy that owned the Burger King franchise, asked me to ride with him and survey the restaurants. During the drive he asked me what it would take to keep me working at Burger King. After an off-handed reply, I seriously pondered the question for about 30 seconds. I said, “I work 55 hours or more each week so you and your wife can live in the house overlooking the 1st tee at the golf course. If I’m going to work that hard, I want to be able to make that same choice.” I guess that’s what has driven me all these years. Often as I fly into San Antonio and my corporate jet, you know, the big orange one labeled Southwest Airlines, banks right or left, I look out the window at the houses below. I see some neighborhoods where all the houses look alike and each one of them has the obligatory gas grill on the back porch. Then the plane flies over one of the upscale neighborhoods and I see a huge difference in style and amenities. I heard it put differently by one of my attorney clients just last week. He said, “I have to compete with attorneys that graduated from Harvard, Yale, and Stanford. I may not be smarter than them but I can darn sure out work them.” Surrounding myself with folks such as these keeps me humble and focused. We live in America where you are free to dream big and go after those dreams. Surround yourself with folks who dream big, work hard, are smart, and successful. As Zig Ziegler would say, “Network up, not down.”

9. Improve yourself every day- one of our core values here at WCM is to improve ourselves every day. Our goal is to be experts at what we do. In order to be the best accountant or the best investment advisor we must stay on top of current rules and trends. Additionally, WCM encourages us to do things such as join a board for something in the community that we are passionate about. The leadership team at WCM also encourages us to read and share information from other industries outside of the financial arena. Why? They know that in order to serve our clients and our community we must be well rounded and passionate. It’s no coincidence that the best conversationalists are generally the most voracious readers. A survey of the CEOs of the S&P 500 companies shows that on average, these very busy, very smart folks read an average of 3 hours each day.

Another of my favorite Zig Ziegler comments is, “If you want what everyone else has, do what they do. If you want more, then do more.” Resolve to do more for yourself in 2017.