How To Make Decisions That Set You Up For Financial Success With Paul Luchau

Life is all about making decisions. But are you making the right ones that will set you up for financial success? In this episode, Paul Luchau poses important questions to help you evaluate how you’re handling your finances. Paul is a speaker, educator, and financial adviser. Today he shares how he helps his clients get started on their path to financial freedom. He explains the importance of savings and the concept of lost opportunity costs. If you want to learn more about managing your money, then this is the episode for you. Join in to get more financial know-how from an expert! --- Listen to the podcast here: How To Make Decisions That Set You Up For Financial Success With Paul Luchau We are going to talk a little bit about finances, something that we have yet to cover in this show. Some of us are idealists. Some of us are thinking about following our passion and dreams. What this means for humanity don't always want to think about money and finances. Finances are one of the things that prevent a lot of people from doing what they want to do in life. I have seen a lot of different estimates about the number of Americans that live paycheck to paycheck. Searching through all these estimates, it's consistently over half, which means that finances in a lot of situations are preventing you from fulfilling your mission in life and going for it. To further discuss this topic, we bring on Paul Luchau from The Momentous Group, who has some great ideas about how we can manage our finances a little bit better and free up that time, as well as free up that slack in our cashflow so that we can go out and pursue what we want to pursue. Paul, thank you for joining us. Thank you for having me. Tell us a little bit about The Momentous Group and what you do. There are a lot of financial plannings out there I believe anyone can instantly find if you hit the networking circuit, a ton of financial planners. What does The Momentous Group do that's so different from your standard financial planning? I have done this for a long time. I was fortunate when I’ve got into the business in 2000. I spent fifteen years in mortgage banking from ‘85 to 2000 and then leaped over into what I do now. It's interesting to talk to people over that many years about their money, what they earn, spend it on, save, what their debts are, and so on. We will talk about this, the Law of the Masses and whatnot. I noticed trends. What I noticed were all those years I could count on about one hand the people that I thought had it together financially. The paycheck to paycheck, the numbers of people are high. I started to realize that most people were doing the same things with their money like everybody else, yet they were expecting a different result. We all know that's the definition of. It became evident to me. I started this study and tried to understand what those trends were and how to combat them. That's an aggressive word. How to look at what everybody is doing, go the other way, and get on a journey that the people were emulating were on versus the ones that everybody was doing. If you do the same thing as everyone else is doing, you should expect the same results that everyone else is getting. When you think of what everyone else is doing, we know it's more than half living paycheck to paycheck. Even more than that is the number of people that feel like they can't pursue their passions because they have to keep that paycheck going. They can't even take a job that may be more meaningful to them but it has a slightly lower salary because of that you are seeing that cause people end up in that situation. Most people are doing the same thing with their money as everybody else, yet they’re expecting a different result.Share on X The people that I work with, I teach them principles. I like that word because the principle is foundational. How do you live your life? What are the principles you live your life by? I had that conversation with my clients. I ask them what financial principles they are living by. Most people haven't thought about that. They don't have it. I try to teach people principles that will help them become and remain. It's financial freedom. It's all about buying back your time. Time is a real commodity. Time is the thing people are after but time costs money. It takes money. We have to pay attention to that. You asked the question, how have so many people gotten to where they are? The banking industry, Wall Street, the government, and the IRS tell us a lot of stuff. They tell it to us often through advertising, people like me, magazines, books, pundits, talking heads, and all the sources where information comes from. They beat the drum to do certain few things with your money, yet it's not getting people the results they are looking for. My message is, what if we looked at what they are all doing, and we didn't do that? We did something different. We’ve got on a different path. Those things that people do are just a few things that the mass tend to do. One of the things that I try to instill in people is, number one, we’ve got to save. You’ve simply got to put money somewhere and get good at that. Between inflation, taxation, fees, the desire to consume, technological change, planned obsolescence, that takes away a lot of money all the time. We've got to build defensive strategies for those things, too. People don't protect themselves properly. I'm not in the property-casualty business for auto homeowners’ umbrellas, but I do see what people have. Often, they are putting themselves at great risk to lawsuits. The numbers and premiums are low. Think about medieval times. One of my favorite movies is Braveheart. The wealthy landowners built castles back then, and the minute the castle was done, they put a moat and a drawbridge around it to protect the stuff on the inside. They went to great lengths to do that. We have lost that in nowadays’s society. We either don't ensure or we do it very inexpensively, or on the cheap. We expose ourselves to problems. I like to make sure people have 6 months or 1-year income storage, not expenses. If you are making $50,000 a year, I would like to see $25,000 or more somewhere. If a job loss occurred a disabling event or God forbid a death of a breadwinner, the family would survive for a while until they can get back on their feet. Some foundational stuff like that, I try to help. I've got plenty of clients who make good money and are doing well. We take those a step further and build on them. For the ones in the middle, we’ve got to do some basic foundational things to give them the right frame of mind to move forward. I have heard quite a bit. That's a little bit of a scary proposition. I don't love that phrase and how it's put. The idea is that if your job brings you in $5,000 a month, you should not be spending $5,000 a month, regardless of what your scenario is. How uncommon is that knowledge? It’s self-evident but it also seems just from the statistics that there were a lot of people who much spend all the money they make between their mortgage, food but then whatever else they decide to purchase. I know you feel sorry for me but I've got three daughters. Financial Success: Have your finances in such a way that you can buy back your time. Time is a real commodity. It’s the thing people are after. But time costs money. It sounds fantastic. They are great kids, and I love them to death. They all live near me, which is fun. They all would buy purses and would fill the purse then they will say, “I need a bigger purse,” and they would buy a bigger purse. They would fill the purse. It's a law where people tend to do that. They gravitate toward that. Not that I'm asking people, I never asked people to change their lifestyle for me to enter their world and help them with their money. If they want to do that voluntarily, then it’s great. We will work with those dollars. We talked through those things about expanding those things. I've got a good friend who's driving an un-air-conditioned car in summer. It was hot. He sucked it up and did it because he's got a nice home for his family. They take a vacation every once in a while, and they save a lot of money, and that's his choice. You’ve got to budget and figure out what works so you can set aside cash. I want you to set aside 12%, 15%, 20% of your income. If you do, as much as that might hurt a little, you will be grateful to have cash resources, to not have to go into debt, to finance a water heater, brakes on your tire or vacation go on a credit card, that you could pay for some of those things and not create the debt that goes with it. These purses seem like a microcosm for what a lot of people do in general life. It doesn't have to be a purse, “I will get a bigger one, fill it.” People do that with homes, “I need a bigger home.” They fill it with stuff, then they need a bigger home, and then they fill it with stuff. One of the messages, and I'm not sure this is what you say to your clients but this is a choice even though it doesn't always feel like a choice because, with the Law of the Masses, everyone is doing it. It's still a choice. Just because it seems like the thing to do, it’s 85% of Americans are doing, it doesn't mean it's not a choice and you are not choosing that priority with your resources. I was very lucky. This is a little bit of my story. I was in the mortgage business from 1985 to late ‘99. How I’ve got into the financial services field was as a loan officer in the mortgage business, I started calling on financial service firms to acquire clients rather than knocking on realtors’ doors all the time. I started going in the other direction. After a couple of years of doing it, the owner of this firm walked out one day and said, “Paul, you are here so often we think you work here. Have you ever thought about it?” It's a true statement. I said,...