Income-Savings & Wealth with Steven LaBroi, Wealth Strategist – February 18, 2018
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Twanda: Good morning. Thank you so much for joining us. Guess what time it is, it’s tax time. It comes around every year just like Christmas but a lot of times we’re not prepared. And you hear people saying, “Oh, I don’t know if I’m going to get money back. I hope I get money back. I wonder if I’m going to have to pay. How much am I going to have to pay?” And according to our wealth strategist, Steven LaBroi of the LaBroi Insurance Group, LLC, you really should know that stuff, right Steven?
Steven LaBroi: Oh yeah. Good morning.
Twanda: Good morning.
Steven LaBroi: Thank you again, so appreciative of being with you on Sunday mornings. And you definitely should be aware of what’s happening with these taxes. It is not like it is a surprise, it comes along every year this time.
Twanda: It sure does, it sure does. So what do we need to do in the year coming up to it? I mean, it’s like right now you start planning for next year. So what are the things that we need to do to really be prepared and know whether we’re going to have to pay, whether we’re going to get a refund back and even down to almost how much you’re going to get back?
Steven LaBroi: Well, I’ll tell you what, what happens is habits are hard to break sometimes. But the idea is preplanning and when you preplan, you actually have an idea on what’s going on for yourself. One of the things that we talk about with our clients is the idea of not wanting to have to have a refund. Refunds are just the government basically holding your money until the end of the year so people start expecting it. And it feels good to have a refund but if we’re going through some of the things we’ve talked about in months prior, managing our money, tracking our money, then we want to use it during the year and just file the taxes and let them know what was going on.
Twanda: So we’re going to talk about income versus savings versus wealth today, all very, very different and things that we need to know. So let’s get into it, let’s talk about income first.
Steven LaBroi: Yeah, income … The reason why I picked these topics is because I think we misconstrue or we kind of pull ’em all together and we say them sometimes and don’t particularly look at the specifics. So income, I want to define it. The definition Webster gives is the amount of money received during a period of time in exchange for labor or services from the sale of goods or property or as a profit from financial investment. There’s a Business Dictionary definition that says the flow of cash or cash equivalents received from work. So we know income being what we get at the end of the week, two weeks or something we can get paid once a month.
Steven LaBroi: Income is usually derived from the daily activities. If you’re an entrepreneur, sometimes you get paid daily a lot of times. If you have a side hustle, if there’s passive money coming from rents or from businesses that you’ve set up, we have to make sure that we look at that as income versus as we’re going to discuss savings as well as wealth. There is a distinction.
Twanda: You even talk about … You gave me an example, you said, “Well, where did your money come from to go see the Blank Panther this weekend?”
Steven LaBroi: Yeah. I mean, we’ve been talking about that for the last month and a half, everybody’s preparing. The idea is, did you get it from your income, did you get it from your savings, did you pull it from some of the wealth that you’ve accumulated? We should know that. We shouldn’t just take it for granted though ’cause Twanda, the movies cost a whole lot more than they did when we were young, I can tell you that right now.
Twanda: They told me that the popcorn and two drinks was $20. I was like, “That’s crazy. That’s crazy.” But look, here’s the thing, how do we make our income do the things we need it to do? I know we use it to pay our bills, we create savings, we invest. But how do we make our income do all those things?
Steven LaBroi: You know, the key is we got to manage it. We must track every dollar we spend. And it seems like a daunting task but we live in the age of technology, we work with a couple vendors that help you with apps. I know that when I was young, I used to just take a notebook and write down the things I spent money on. The idea is when you track it, you control it. And when you start to look at things that are not necessarily things you want to spend money on at the time, you have a conscience that will put you in position to say, “I’m going to do something different this time. I’m not going to spend money on that. I’m going to wait and get that outfit for that conference that I’m going to.”
Twanda: Make it mean something. It has to be on purpose.
Steven LaBroi: Yes. Our life is like a mini economy. Things go up, things go down, things go sideways, almost like the stock market. And if you think about it, it really gets to a point where you have to anticipate some things that might happen. So you have to make sure that you manage your income accordingly and put it in these next couple of buckets that we’re going to discuss.
Twanda: Absolutely. Let’s get down to savings. That’s a interesting little thing, the savings, I’ll tell you.
Steven LaBroi: You learn that right from the beginning. I mean, usually when you’re a young, young person, parents and grandparents tell you right out the gate, “Save your money, you better save your money. Put some money away.” Well, let me tell you the definition of savings is just that. An amount of something that is not spent or used. The amount of money that you have saved, especially in a bank, potentially a bank but we talk about all types of banks, but a bank over a period of time.
Twanda: What does the Business Dictionary say about that?
Steven LaBroi: Well, I look at that as well because we’re all doing business. The Business Dictionary says the portion of disposable incomes not spent on consumption of consumer goods. Let me say that again, not spent on consumption of consumer goods but accumulated or invested directly in capital equipment or in paying off a home mortgage or indirectly through purchase. So the idea is we should be able to see our savings somewhere that may last for a period in time and we know that those savings take on a couple of different elements.
Twanda: I love that we do have to think about saving for a rainy day. You talk about the three different categories I think it says or … Yeah, three elements of savings.
Steven LaBroi: Yeah. I mean, you know, lifestyle, emergency and longterm make up savings. We get that from our Money Mastery Program. And it’s so true because lifestyle is usually an impulsive thing or it can be a contrived thing that we decide that we want to take some of our savings and do something. Emergencies, they happen daily and if you’ve lived long enough, you know that rain soon come, if I can say it that way.
Twanda: Yes, absolutely. Like the Caribbean people say that.
Steven LaBroi: Yes, a rainy day happens often, and car break down and the gas bill ends up being higher because we had extra cold days in the winter. It’s Easter coming, time for that Easter soup.
Twanda: Well, look, here’s my emergency, my son busted up his knee. He’s in Australia and he kept telling me, “I’m going to have surgery,” in the, of course, military. So I said, “Okay, when’s the surgery?” This is like in November, December. He was like, “I don’t know. They haven’t given me a date.” All of a sudden he calls me on last week and says, “Mom, my date is March 5th and six. I’m going to be in a hospital four to seven days.” So what does momma do? Momma got to go to Australia because my son has never had anesthesia, he’s never had a surgery and he’s in a foreign country. Anything could jump off and he must have an advocate. So we had to dip into the savings to get that 2,000-dollar ticket. What? And hotel.
Steven LaBroi: Yes.
Twanda: It’s expensive.
Steven LaBroi: Yes, see, I mean, that’s a prime, prime example-
Twanda: It is.
Steven LaBroi: … of having it available.
Twanda: Yes. You must, and especially if you have kids ’cause I mean anything can happen. You can have an accident in your car and have to do physical therapy, go to the doctor. And I know the insurance takes care of some of that but some of that is going to come out of your … I mean, anything can happen, anything.
Steven LaBroi: Right. And like I said, the elders have always tell you, “Put some money back.”
Twanda: That’s right.
Steven LaBroi: We’ve heard all the clichÃ©s. You pay yourself first. The idea that we have to confirm is where do we put that money so that when it’s time for Twanda to go to Australia, you know that it’s there for you.
Twanda: And it’s not going to kill your budget. Your household is not going to go into chaos because you had to take this money. You know what I’m saying? So that’s why we need savings because life is just like that. I mean, it’s just like that.
Steven LaBroi: Right.
Twanda: And so my mortgage is going to be paid, all my bills are going to be paid because we had some savings set aside.
Steven LaBroi: That’s right. And then when you come back, the idea is simply this, put that money back.
Twanda: Back, right. When you can, put that money back, yeah.
Steven LaBroi: That’s right. There’s lifestyle, emergency. Longterm is getting into more of a retirement savings because we know that we’ll get to that point one day. However soon, however late, the idea is to be able to cover when very little income is coming back towards you.
Twanda: Exactly. And again, you really never know when that’s going to happen. A friend of mine in his 40s had a major stroke and so his retirement started in his 40s. You know what I’m saying? Yeah.
Steven LaBroi: Yes. And that was due to an emergency. I’ve read, hear lately that we had some millennials who actually are planning retirement and they start with these ultra professional businesses or careers and they vow that they weren’t going to spend anything and they were going to be very, very conservative and strict on their saving. And in their 30s, they decide that they’re going to make their money allow them to not have to be working and they just consider themselves retired and travel.
Twanda: Isn’t it amazing? That’s amazing.
Steven LaBroi: Yeah.
Twanda: That’s amazing.
Steven LaBroi: Yeah.
Twanda: That’s amazing. I know some-
Steven LaBroi: You live the life you want.
Twanda: Yeah. I know some people in their 40s, early 50s who’ve already retired but they did the proper things in preparation for it.
Steven LaBroi: That’s right. We’re talking about planning on a regular basis. Planning for those taxes, planning for life, happenings, even lifestyle. You know, you know what you need to do during the year. There’s probably a number of conferences, a number of things you want to learn, things you enjoy doing. I have a friend who likes ballroom dancing and so she knows that she sets aside enough money every year to go on conferences where her-
Twanda: Yeah, that can be expensive.
Steven LaBroi: Like cruise ships.
Twanda: Yeah. So let’s move on to wealth. What’s the definition of wealth? A lot of us want … We want money but we don’t know that money is not wealth.
Steven LaBroi: Yeah. I’m telling you, this is one of the ones that I love to talk about and primarily because when it comes to income, that’s what we earn, when it comes to savings, that’s what we put back. When it comes to wealth, it’s what we do with those dollars so that it creates more dollars. So Webster’s definition is this, wealth is usually a measure of net worth. That is, it is a measure of how much a person has in savings, investment, real estate, cash, less any debts. Remember in the past we’ve talked about debt being a choice and we continue to hammer a lot of those ideas.
Steven LaBroi: I have another definition that I love, that I pull from a book, Robert Kiyosaki being the author of Rich Dad, Poor Dad, a lot of people have read it. I heard and read him say, “How many days can you live in the future without having to go and create more income?” It made me think, it really made me sit down and think that if I calculated the money that I have or what’s coming in or even when I stop working, can I live three days, 10 days, two years, 10 years without me having to go get a new income? Yes.
Steven LaBroi: And the idea really is to focus on it because even early or later things are going to happen that you’re going to need wealth to pull from. And I always say, life is no mystery, if we can just pay attention to parents and grandparents and start to look at these kinds of things as early as possible so that we can try and anticipate what might be our situation as we continue to move forward.
Twanda: And I always say this when we’re talking about accumulation and wealth, is that it’s never too late to start. I know that some people had to get to a point where they could save and start the accumulation and it might have been in their 50s but it’s never too late to start.
Steven LaBroi: That’s right. I hear people talk to me about being in their 50s and after having raised children, after having gone to school and educated themselves, paid tuition and they say, “Well, I’m going to work forever.” Well, that sounds like something that you feel but let me tell you, when you start putting the numbers on paper, we can put a plan together to find out what that forever really means. And it’s all about putting numbers on paper because you can make certain sacrifices and then some instances people are willing to cut back on things. And so they’re in a position to actually have a realistic look at where they’re going, where they want their life to be. We can get back to dreaming.
Twanda: I like that. I like that, I like that. So look, all of these ideas, they can go to your website and get what you’re talking about here; savings, wealth and income, right?
Steven LaBroi: Yes. We can begin that discussion there. I can certainly have all kinds of one-on-one, group discussion, labroiinsurancegroup.com. It’s really about having the discussion, doing an analysis and then seeing what we can implement. It’s very, very important, labroiinsurancegroup.com.
Twanda: All right. Our Money Mastery principle number seven is always look at the big picture. What does that mean?
Steven LaBroi: Well, it simply means to make sure we’re planning for tomorrow. Sometimes we look at getting up today or, say Monday morning, and that’s tomorrow. No, we want to plan for a little further into the future. People use the term YOLO or you only live once and that’s right. But the question is, if you could actually depict how long then you know how much you need to spend. But that’s hard to compute so let’s plan for the future. The idea is the big picture. Once again, I say it, take a look at your parents and grandparents, this will help you understand what things you may have to consider as you get older.
Twanda: My grandmother did not plan to live to 91 yet she’s still here at 91.
Steven LaBroi: Oh my God, yes. And you have to note that and that’s in your genes. This is a great way to know that the big picture is about managing your money, managing your day-to-day, managing your income, managing your savings and then building wealth so that you can become the legacy change.
Twanda: All right, next month we’re going to talk about building a private bank of money to use while you’re living with life insurance. My mother does that, I love it. And it’s called building a human equity line of credit. I can’t wait to hear about all of this.
Steven LaBroi: So I thank you again, this has been so fun.
Twanda: Tell everybody where they can reach out to you.
Steven LaBroi: Yes, Steven LaBroi, L-A, capital B, R-O-I on Facebook, Instagram, Twitter. Teaching at human equity line of credit, that’s humanequitylineofcredit.com and my website is labroiinsurancegroup.com. That’s L-A-B-R-O-Iinsurancegroup.com. And again, I really, really, really appreciate you Twanda.
Twanda: All right, Steven LaBroi, our wealth strategist. Thank you so much for joining. Cannot wait to hear about that human equity line of credit on next month. Thank you so much for joining us.
Steven LaBroi: Yes.