Have we ever wondered why the more we grow older, instead of accumulating wealth, we ended up having more and more expenses to pay for.
Let me introduce to you, one our financial concept – the X Curve, this concept theorizes that as we get older, we should be able to accumulate wealth and lessen our responsibilities. Thus, we should be able to live comfortably during our golden years.
In wealth building, one must understand the relationship between our responsibilities and the amount of wealth we have created.
Law of Building Wealth
The blue line signifies the wealth we should accumulate over time. In here, we see that it crosses different quadrants and it answers our needs based on what our current situation we are in and how much wealth we have actually accumulated.
For example, in quadrant 1. We are in a situation where we are bound to many responsibilities but has little to no savings and the question is, what if we die too soon?
If we are the bread winner and we are the only asset our family they could turn to, then your life is very much of value. Thus, the need for protection is highly advisable.
Law of Decreasing Responsibilities
The Red line signifies our responsibility, when we are younger and just starting a family we have high responsibilities, namely; Children, Mortgage, Child’s education, Debts/Loans, Daily needs and many other necessities. Thus, as head of the family we are responsible for these obligations whether we live or die. Early on, our need for insurance protection is quite high. But, as our children grow up, mortgage matures and debts are reduced, our responsibility decreases.
In this stage of our life, the challenge is, have we accumulated enough for the most expensive stage of our life – retirement. It is a blessing if we live too long, but if we live too long so does our expenses and if we are not ready for it. It might be a curse. Thus, the need to prepare for a long term retirement fund arises.
Understanding X Curve
This concept will help you decide on what is your priority when it comes to your finances. Given that you know what will be your needs and how much it is will motivate you to save more, invest more and accumulate assets faster.
This concept is of no benefit to people who is not responsible enough to acknowledge their family’s needs. We can just say we love them, but not really fighting for them. Instead of saving up for the future, so that we may not end up begging. Many is still spending a lot on things that don’t really matter.
Without responsibility, there is no need for saving and investing.
PS. We are advocating Financial Literacy, teaching people around the world how to achieve their financial goals. Our mission is to help each and every family to achieve financial independence and away from financial insecurity during this challenging times. Attend our FREE Personal Finance Seminar. Register here.
PS2. Do you want to gain Financial Wealth and Spiritual Abundance at the same time? Join the Truly Rich Club.