Big-Picture Financial Strategies To Fuel Your Wealth-Building Machine

It’s an institutional, generational problem that explains why our parents struggled to maintain middle-class status, not knowing any better than trading their time for money. Passive income wasn’t even on their radar, much less were concepts like infinite banking or syndications. 

Since you’re reading this post, I can tell you’re one of the lucky ones – the sole ostrich in the flock who daringly pulled his/her head out of the sand to seek a better solution. For that, I’m proud of you. Keep reading for the five big-picture concepts that have the power to catapult your financial situation to the next level. 

Personal Finance In Four Stages

One way of stepping back and seeing the big-picture cash flow journey is to break it down into “four pillars” as M.C. Laubscher from Cashflow Ninja calls it. He teaches cash creation, cash capture, cashflow creation, and cash control. 

In the first stage, Cash Creation, you pursue endeavors that create money. This includes getting a degree, finding a great job, creating connections with industry peers and seniority, starting your own business, finding a mentor, and hustling to make bonuses and get raises. You’ve got to earn an income to survive in this world, so this stage is critical to all the other stages. The funny/not funny story, though, is that this is where most people get stuck!

The next stage is called Cash Capture, and this is where you create a buffer between how much you bring home and how much you spend. This is where you’re continuously watching the budget and ensuring you’re saving a portion of your take-home income and hopefully increasing that percentage as quickly as possible. This “gap” between your income and your spending is where you seize the opportunity to capture cash and use it to fund your investments, purchases of appreciating assets, and your infinite banking strategy (I’ll explain this in a little bit.). 

Once you have emergency funds in place, generally have a grasp on your budget and savings, and are consistently capturing that gap, you move on to the cashflow creation stage. Now notice this is Cashflow Creation – very different from the first stage of working for cash. In this third stage, you learn how to use the money you’ve saved and the relationships you’ve nurtured to invest, generate additional cash flow, earn interest, and create income independent from your day job. 

Honestly, you’re probably in this third stage now, actively seeking investment opportunities and leveraging your earnings toward a diversified wealth-building machine inclusive of insurance policies, stocks, REITs, bonds, residential real estate, and appreciating assets like those found in real estate syndication opportunities. 

The final stage isn’t really a final stage at all (curveball!) but more of an ongoing life-long focus to protect and tailor your overall financial strategy in alignment with your goals. This Cash Control stage involves creating a will, pursuing estate planning, maintaining life and disability insurance policies, and ensuring your finances are set up for longevity. You didn’t learn this stuff in school, so it’s up to you to intentionally learn and refine your financial plan toward protecting your assets from creditors, taxes, and lawsuits and providing a legacy for your loved ones. 

I’m sure you’ve heard the phrase “making your money work hard for you” thrown around, and in a nutshell, focused action in each of these stages throughout your life will do precisely that!

Infinite Banking Strategy

This big-picture strategy also called “becoming your own bank” and “private family banking strategy” is where you use a whole life insurance policy to become your lender, borrower, and beneficiary all at once. This concept blew my mind when I first heard about it, so hang with me. 

Look at the typical bank. They accept people’s deposits in exchange for a “safe” place to store the cash promising minimal interest earnings. The bank loans that money out to others and earns a much steeper amount of interest off the loan. All along, if someone defaults, they are the beneficiaries via collateral, collections, etc. Why deposit your hard-earned cash into a bank for minimal interest and then borrow other money at a higher interest rate? It just doesn’t make sense! 

Here you flip the institution on its head, buck the system, and do your own thing. If you followed the four stages above, you captured cash and have significant savings ready to invest in creating passive cashflow. With this cash, you buy a dividend whole life insurance policy from a mutual insurance company. When written correctly, your policy will allow you to fully fund it quickly and borrow a large portion of that money from inside the policy within the first year. 

Now before your head spins, let me explain. When you fund the policy quickly, you become eligible for dividends and earnings inside the policy itself. When you borrow against your policy at a low rate, you’re still earning interest on the full value, AND you get to reinvest that borrowed money into a real estate syndication. 

Boom! You’ve taken $1 and invested it into two places at the same time, AND now you have an insurance policy too! There are many other details to this, which I’ll save you from right now, but just know this is one tax-advantaged option for creating a wealth-building machine.

Buy Your Time Back

Another wealth-building machine that’s often overlooked is your ability to recapture your most valuable resource – time. When you start out, your focus is to create cash, and it’s highly likely one might spend 40-60 hours a week doing so. 

That’s not a sustainable life/happiness model, though, right? At some point, you want to have captured enough cash and begun to invest in lucrative deals so that you could reduce the amount of time you have to put in and instead spend it doing things you enjoy.

This is where you buy your time back. Maybe that means hiring an assistant to keep you organized and run little errands for you, or perhaps that means hiring household services like laundry, a maid, and a landscaper. In all areas of life, I encourage you to explore the activities you do, their worth, whether you like doing them, and how much of your time and energy they take. When you conclude that specific actions are not worth your time or energy, hire them out and, in exchange, use your time to learn about and pursue the next level of wealth-generation. 

Another way you can fast-track your wealth-building machine is to intentionally surround yourself with people who inspire you. Find connections ten steps ahead of you, who are doing things you wish you could be doing, and then find ways to infuse their lives with value. Use your knowledge and expertise to support them and further develop a positive rapport with them. 

You’ve probably heard the quote by Jim Rohn, “You are the average of the five people you spend the most time with.” Well, recent research shows that who you are is even affected by your friends’ friends and those friends’ friends! This emphasizes how imperative it is to seek masterminds, mentors, and relationships with those you admire. 

When you surround yourself with these valuable connections and adequately nurture the relationship by infusing support into their lives, they will inadvertently share advice and higher-level concepts, giving you the “in” and accelerating your wealth-building journey with fewer mistakes. 

Continuously Break Parkinson’s Law

Finally, the greatest, most valuable high-level advice I can provide is that you have to break Parkinson’s Law over and over again. Parkinson’s Law is the concept that the more income you have, the more you spend. 

You and I conceptually know that you have none to save or invest if you spend everything you make. However, this is the conundrum that most people find themselves in. Each raise or bonus allows them to afford something they’ve been eying and craving for a while, and eventually, they look back and wonder why it feels as if they can never get ahead. 

You, my friend, are ahead of the curve, though, and with the four cash stages, buying your time back, and infinite banking knowledge, you are destined to succeed. You’re keenly aware of how to thrive in that Cash Capture step and ensure your expenses are much less than your income. 

But that’s not enough! You have to continually refocus and reevaluate your cash capture strategies to ensure you always have more and more to invest, fueling your wealth-building machine. With each raise, cashflow check, and bonus, you have to remain conscious of the temptation to spend more and break that cycle again.