The X-Curve Guide For Wealth Creation
The X-Curve Concept Important For Creating Wealth
is a proposal that defines the relationship between one’s financial responsibility and the ability to become wealthy. The simple explanation claims the theory that as one ages, the personal financial responsibilities decrease while the wealth potential increases. The concept uses two curves based on the financial responsibility and wealth resources that intersect to generate the X-Curve relationship between them.
Always A Game of Numbers
Considering the inputs into these graphs, one conclusion is universal, that is, saving towards retirement and the building of true wealth are a game of numbers. The same amount of money can be used for both with additional advantages of building for a comfortable old age. It requires for one’s ability to input customized figures into the wealth formula. These crunches how to work without paying too much in unnecessary taxes and so-called desirables. In fact, everyone can build wealth, irrespective of where they find themselves on the X-curve.
Components of the X-Curve
The responsibility curve assumes that as you start out in life, you have little money to start with, yet, you become challenged by providing financial cover for increasing life responsibilities, including getting married and raising a family.
The challenge is that with age, there is little money left from your income to invest aggressively in a savings regime until your children become mature enough to care for themselves. It is during this period that one makes provision for cars, mortgages, borrow student loans and accumulate debts.
The wealth curve which runs in the opposite direction confirms that you have very little in terms of savings and investments until you cross that threshold when you have paid off the interest on your mortgage and other loans and are now paying off on the principals of those loans, if they are not fully paid off yet. In addition, since your children are probably no more your responsibility, and you are earning more from your employment, you have more investible income to use in making wealth. So, personal wealth increases because you are spending less and saving more.
Commercial Savings Accounts Are Not Meaningful Savings Vessels
It is easy to paint a nice picture with the traditional concept of a married couple with two children. However, this picture does not fit the Generation Z and AAs current lifestyle. Typically, the younger millennials who are just ahead of the Generation Z’ers plan not to marry. This is cowardly, and not financially sound. Most young folks live with their parents, who are happy to have them co-habit and sharing the bills. Therefore, these young people avoid mortgage payments and easily have about half a million dollars in their 401k accounts. They may feel good, but it is still not very smart.
Many of the younger millennials and emerging Gen Z’ers and AAs accelerate their student loan payments, apparently a smart move. However, if that move is not correlated with a tax-advantaged option on the wealth formula, it is not a wealth move but a fear-based attempt to remain credit worthy for more loans. Commercial banks are waiting the wings to help entrench you deeper into the debt pit. The benefits of using the same money paid to generate wealth are lost if the repayment is not calculated to be tax advantaged. This is where it becomes smart to get a financial advisor involved. The easiest way to make sense of this is to compare your bank’s savings interest rate with your credit card rate. Are you sponsoring the bank or saving money?
Using the X-Curve To Create Wealth
The goal of the X-Curve is to create a platform for one to build a solid foundation for wealth by encouraging savings, and investments to accumulate wealth generating assets quickly while reducing debt, mortgage payments and liabilities soonest.
It does not matter whether you die too early or too late. What is important is to enjoy life to fullness without causing untold hardship and pain for your survivors. What you may find out from an assessment is that you may have more potential to be wealthier than you currently are. Talk to us we can help you put it all together.