• Regis Arzu

Learn How To Master The Power Of Long Term Financial Planning To Change Your Life

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress the people they don’t like.” - Will Smith

Today I want to talk about long term financial planning. Specifically the following...

  1. Why think long term?

  2. Why don't we think long term?

  3. How do we think long term?

So let's just right in...

1. Why Think Long Term? (Long Term Financial Planning)

I want to explain what I mean by long term financial planning. What I’m talking about is the process of financially planning for 1 year ahead, two years ahead, 5 years ahead, and even 59 ½ years from now. If that sounds pretty specific, it’s because it’s the age you can withdraw from your retirement account without a penalty.

There are a few reasons for thinking long term, it’s because whatever we do today affects us tomorrow. For example, there’s a huge amount of people that get their income tax and spend it immediately, you buy clothes for you and your kids, you buy new technology like a TV, or that expensive thing you always wanted, like flying to Jamaica. But people don’t think about saving most of that money and keeping it in the bank in case of emergencies, and there’s always an emergency. How many times last year you though, Man I wish I had $500 to do this or $100 to pay that. Or if you lost your job and didn’t have any money. My thing is that emergencies always happen, so, why are you going to put yourself in a position to be ok when a financial emergency happens. How good could a chunk of savings do for you right now during this Pandemic? I’m not saying that going to Jamaica is bad, but plan for it. Save up for $1000 in you’re saving in case of emergencies and then got to Honduras. Some banks have accounts they call a Vacation Club account and a Christmas club account which do the same thing which automatically transfers money into these accounts and right before summer or right be Christmas all the money you accumulated gets transferred to your account. Now that’s planning. So to be clear planning and saving ahead prepares you for any emergencies and emergencies are where the biggest financial cost come from.

Another reason for long term planning is because the big money comes from long term accumulation. Based on a survey by the Transamerica Center for retirement studies show that the average savings for Americans age 20 is $16,000, Americans Age 30 is $$45,000, and age 60 jumps up to $172,000. And this is an average for all Americans. Why does 60 jump so high, it’s because the average American saves for retirement and at the age of 60, they have that money. So plan for retirement, plan for the age of 60. I know it seems like a long time from now, but think about 10 years ago, do you even remember it. It past by fast right. Now go to a person you know that is 60 and ask them how fast life flew. And the way to get there is to start saving now and thinking about tomorrow.

One thing I tell people is, whenever they can save a dollar from their bill a month, multiply that by 12 and that’s how much you save a year. If you went from regular cable paying $120 a month and you went to Netflix and HULU for $18 a month combined. You save $102 a month which equates to $1224 in annual savings. I saved that much when I cut cable 6 years ago. That means I saved $7,344. Now, would you believe me if I tell you that that’s how much you need to put down on your home? Yes, saving on your cable can lead to buying a house in 7 years. That’s what happens when you think long term?

2. Why don't We Think Long Term?

The next thing I want to talk about is why you don’t think long term now. It’s really hard, I get it. Who wants to think about 30 years from now when your friends are inviting you to Belize today? Yes, you’ll see those beautiful pictures of your friends and family in Belize. FOMO (fear of missing out) is real, but that $1000 you save can go a long way. Have you ever seen your friends when they come back, they’re all like. I can’t go out, I have no money. Or they’re using their credit cards and accruing debt.

I would say, the three main reasons why it’s so hard for you to think long term is because of FOMO, Social Media, and the fact that you know all too well that tomorrow is not promised.

I talked about FOMO a little so I want to spend a little more time on social media. Because social media causes Fear of Missing Out and it makes you want instant pleasure. How many times you see pictures of your friends out together on vacation or people showing off their latest gear. It makes you think, I want that. But also, everything is at the speed of now because of social media and if you live in a world where everything is happening now, that’s how you’ll want to live your life. You’ll be thinking, “I gotta make sure my life is looking good for The Gram.”

There is an amazing quote Will Smith said “Too many people spend money they haven’t earned, to buy things they don’t want, to impress the people they don’t like.”

I’m going to repeat that again and let you ponder on that...

“Too many people spend money they haven’t earned, to buy things they don’t want, to impress the people they don’t like.”

And the other reason why we don’t think long term is because we know all too well that tomorrow is not promised. I know people that died too early, R.I.P. to my cousins Eric and Linda and my friend that got stabbed in front of me that Thanksgiving Day, they died too early. And I'm sure you know people who died too early, as well (I’m sorry for your loss...) And tomorrow it could be us with Coronavirus out there, as statistics are stating that Coronavirus is killing a big chunk of African American and Hispanics due to health reasons caused by a series of systematic racism in this country. But that’s neither here nor there. What I'm trying to say is that I get it. The thing is that you have to think about your why. Are you doing it for your kid? Are you doing it for your mother? Are you doing it to be a good role model to your younger brother or sister?

So a few days ago I had this person I am working with tell me that it’s hard to save and stick to a budget for so long. And I asked them, “Quick question, if your kid was about to get hit by a moving car, would you jump in front of that car for your kid? She laughed and said yes, as if it was a silly question. And I laughed and said, you don’t have to think about it? She said “no, it’s my kid Regis, Yes.” So I asked another question, “Would you stick to a budget and save for the next 8 years if it led to putting your kid in a better financial position?” And she got serious and said, “I get it.”

Finance is a state of mind and its long term panning. It's long term planning. Songs like Drake’s YOLO, "You only live once” sounds amazing, but, the truth is that most people do live until 60. God willing, you will. And what will you do today to make sure you are in that position tomorrow, and by tomorrow I mean 10 years from now.

3. How Do We Think Long Term?

Which leads to the last thing, how do we think long term? What are some actionable things you can do to think long term? I have a challenge or call to action for you. Open up your online savings account and find one of your monthly bills that you can save from and put that money in that savings account. OK let me explain, let’s say you have Disney Plus, Netflix, HULU, and Amazon Prime. Only cancel one of them for example, and the savings you make, HULU for $8 a month. Cancel HULU and put $8 in that saving account every month for the next two years. It doesn’t have to be HULU.

Another example is, if you currently pay. $6.99 a month for Disney plus, you can pay the annual fee of $69.99 which breaks down to $ 5.83 a month. Now take that $6.99 a month savings automatically put it into your savings for 2 years and watch it grow.

To be clear in what I’m asking is, to find some way you can cut from your bill and the money you save a month, put it in your savings account.

OK pain to progression family, hopefully this was extremely informative for you. You can send me your questions at my Pain To Progression Facebook Page or my email address at Pain2progression@gmail.com

Now, this information is for you to use and grow financially, but it’s also for you to please share with at least 3 other people you know that can use this information to grow financially. Paying this information forward is how we build generational wealth. Let’s take this information and flip the world upside down. See you at the end of the tunnel of that success train.

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