The Basics of Finance Everyone Should Know

We are in a world filled with advice.

You have been told that finance is “too complicated”, that you don’t have the time, so just “trust” someone and hand your money (and future) over to risk.

So, let’s cut through the noise.

What are the most important pieces to know when it comes to money?

Pay Yourself First

The most basic thing to start with is to pay yourself first.

Automate savings.

Do not automate your investments.

Become a deliberate, better investor, focusing on cash flow.

Let me be clear about something: you can’t shrink your way to wealth, and you definitely won’t budget your way to prosperity. Instead of focusing on cutting back, focus on keeping more of what you make. That’s where the real power lies.

To find money for your automated savings, begin by plugging financial leaks. Create a tax strategy, negotiate the best possible interest rates on your loans, design your insurance to transfer catastrophic risk, and remove any inconsequential coverage.

When it comes to your investment vehicles, pay attention to fees. Remove any unnecessary drag that creates a headwind. Are those expense ratios worth it with your mutual funds? How about the 12b-1 fees or the legal and administrative fees with your retirement plans? These percentages make a substantial difference to your bottom line.

Work your way to fifteen percent of your gross income. This doesn’t have to come from cutting back or cutting out; it can come from increased efficiency. Keeping more of the money you make through strategy.

Build a Peace of Mind Fund

Build up at least six months of expenses in a safe space.

This can be in gold, cash value life insurance, or even Bitcoin for the right person (although it is obviously more volatile). If you don’t know much about Bitcoin, learn more. It’s time.

Having this fund gives you options. It gives you breathing room. It gives you confidence. When you have this safety net, you can make decisions from a place of power rather than fear.

And here’s what most financial advice gets wrong: A peace of mind fund isn’t just about protecting against disaster—it’s about creating opportunity. When you have capital available, you can seize opportunities that others can’t.

Once you have established your automated savings, you can enhance your savings benefits by allocating a portion of that money to properly structured, optimally funded whole life insurance.

You will keep access to your cash while creating tax advantages. You will secure a permanent death benefit while having the ability to recover the cost of term insurance, and add accelerated benefit riders (ways to access your death benefit for long-term care.). The downside is the amount of time it takes to break even with your cash value. Therefore, you will be at a short-term disadvantage.

Get Your Financial House in Order

The next phase is to get your financial house in order. To secure your foundation and financial fitness.

This means designing your insurance properly: car insurance, homeowners’ or renters’ insurance, excess liability/umbrella policy, disability insurance, health insurance, life insurance, and business owner’s insurance (keyman, business liability, etc).

Next, it is essential to ensure you have the right corporate structure for your business. That you have a regular rhythm with your tax team.

I recommend meeting every three months. Proactively maximizing your deductions. It is important to consider asset protection by setting up a corporation as well as wills, trusts, and medical directives.

This is the legacy planning that can protect your assets now and after you die. This can minimize tax and mismanagement when transferred to your heirs.

Know Yourself as an Investor

Investing requires more effort.

Risk isn’t in the investment; it is in the investor. So, what type of investor are you? And what type of investments aren’t for you?

You must let go of the notion that it’s too complicated or that you don’t have enough time, and become a better investor. Discover your Investor DNA. What do you value? What competencies do you have? What drives you? You can mitigate risk by learning.

Most people think they need to diversify, but what they really end up doing is “di-worse-ifying.” They spread themselves too thin across investments they don’t understand. Instead, focus on what you know and what aligns with your core values, competencies, and drivers.

Your Investor DNA includes your:

• Core values – what matters most to you
• Core competencies – your strengths and experiences
• Core drivers – what motivates and energizes you
• Core focus – areas you’re committed to and creating rhythms around

When you invest according to your Investor DNA, you reduce risk and increase returns because you’re investing in what you understand and care about.

Focus on Creating Cash Flow, Not Building Net Worth

Net worth is just a number on paper. Cash flow is what creates freedom.

The traditional financial world has it backward—they want you to accumulate a pile of money, then hope you can live off a small percentage of it during retirement. That’s gambling, not investing.

Instead, focus on creating assets that generate monthly cash flow that exceeds your expenses. When your investments produce more cash flow than your expenses, you’ve reached economic independence.

This can happen in 10 years or less with the right approach—not the 30-40 years the financial industry wants you to believe.

So what will be your cash flow driver? Are you skilled in any aspect of real estate? How about business? Maybe intellectual property? The key is to identify where your skills, knowledge, and interests can create ongoing income streams.

This is about investing in yourself. Your financial education. Personal growth directly impacts your ability to generate cash flow. The more value you can create, the more cash flow you can generate.

Instead of accumulating and locking money away for decades, create cash flow. Once you have enough cash flow to cover expenses, you are financially independent. You have more freedom, more choice. You get to choose what you want to do and not want to do. You are no longer forced to work.

You can choose the work that is most meaningful and important to you.

Avoid the Consumer Condition & Cultivate the Producer Paradigm

Most people are stuck in what I call the “Consumer Condition.” This is a state where people feel victimized by external circumstances, blame others for their financial situations, focus primarily on consumption rather than creation, and make decisions based on scarcity rather than abundance.

In this mindset, people spend their lives working for money rather than having money work for them.

The alternative is the Producer Paradigm. Producers focus on creating value, serving others, and building systems that generate ongoing cash flow. They don’t chase returns—they create them.

In the Producer Paradigm, you:

• Focus on abundance rather than scarcity.
• Create win-win scenarios instead of win-lose.
• Operate from faith rather than fear.
• Serve others instead of being selfish.
• Practice interdependence rather than dependence.
• Act as a steward rather than an owner.
• Utilize resources rather than just accumulate them.
• Create rather than destroy.
• Take accountability rather than relying on luck.
• Create value rather than feeling entitled.

Your mindset is perhaps the most fundamental of all financial basics—if you’re trapped in the Consumer Condition, no investment strategy or financial tool will ever create true prosperity for you. Shifting to the Producer Paradigm is the essential foundation that makes all other financial decisions more powerful and effective.

Become the Expert of Your Money

You don’t need a financial expert to tell you what to do with your money. You need the knowledge to make your own informed decisions based on what matters to you.

Stop chasing returns and start creating value. Stop sacrificing today for some distant future that may never come. Instead, build systems that create cash flow now while setting you up for long-term prosperity.

The basic formula is simple: pay yourself first, build a peace of mind fund, get your financial house in order, discover your Investor DNA, create cash flow, and escape the Consumer Condition.

Your richest life isn’t about having the most toys or the biggest retirement account—it’s about having the freedom to do what matters most to you, with the people who matter most to you, right now.