Economic legacy | There are 5 best practices to safeguard your economic legacy that has proven to be highly effective for decades.
Perhaps you think that because it is the 21st century these practices may have lost credibility, but the rules for legacy protection have been governed by the same principles since the beginning of times.
Here we present a group of ideas for your consideration.
Since the concept of debt and money originated, human-to-human commercial relationships have developed and flourished more efficiently.
The key variables and constants have prevailed and some new principles have been added throughout history as the economy grows and diversifies.
Likewise, businesses have grown and evolved due to technology, science, and human resourcefulness.
Taking all this into account, generating and maintaining our wealth may seem difficult, but it is not.
On the contrary, we can now use and take advantage of the large amount of information generated by mankind to take care of our economic legacy, make it grow, and benefit from it.
5 Best practices to safeguard your legacy
Essential practices
The first thing that good management takes into account is the organization of expenses.
It is necessary to design and maintain two types of monthly budgets: income and expenses.
It can be managed in any way, be it digital or physical.
The important thing is to collect all the necessary information and organize it so that it can be analyzed quickly.
This allows us to review in detail how much money is spent and where while we keep track of what comes in.
Basically, the budget of expenses vs. income allows us to control, visualize and plan our cash flow.
By budgeting effectively, we can observe our assets and liabilities. We can also appreciate how their value is affected by market fluctuations and the value of local currency vs. foreign currencies.
By having a global and real-time view of our budget, we can do several things.
First, determine what surplus is to be saved in a disciplined manner.
Then, of that surplus, what part is going to be used for investments, in the same way, we can determine if the return of our past investments will be reinvested similarly or in a new area of interest.
Invest in learning
After becoming aware of our expenses vs. income, it is necessary to take a look at Financial Training.
There is a large number of resources at our disposal, in the form of advisers, companies, academies, and universities where we can invest our time to obtain the highest dividends.
Financial education is the key to the security of our assets and our heirs.
Our distinct view of money is extremely important to preserve it.
Personal financial growth can suffer if our perception of business does not go hand in hand with our goals.
Our patrimony can remain stagnant and even decrease if we act inappropriately.
That is why one of the goals for 2021 should be personal financial training.
This will undoubtedly multiply our ability to understand the economics of our businesses and the local and foreign financial environment as well.
The more training you have, the better your decision-making, which leads us to the next issue to discuss in our 5 Fundamental Practices to safeguard your legacy: Emotional expenses.
Control your emotions
Losing control of our emotions may disrupt wise decision-making.
In financial terms, it is highly risky since it directly affects our financial assets – and that of our heirs.
In the same way, it affects our businesses and investments, also your economic legacy.
This may be hard to grasp or understand at the moment, but emotional expenses are likely regrated later.
The underlying advice is basic: Don’t give in to your emotions.
We start by reducing the tension of private spending.
It is not wrong to indulge yourself monthly, but before doing so, it is advisable to spend some time analyzing our budget of expenses vs income.
Then, through financial training, we will know how we should invest and reinvest.
After this, we will have the necessary vision to know what percentage of our assets we can spend on ourselves.
We will become selective buyers without becoming stingy.
As the months go by, we will realize that we can achieve a balance between self-satisfaction with purchases and the satisfaction of seeing our wealth grow without diminishing the quality of life.
It becomes a rewarding experience, as we will maintain our Status Quo and later that of our succeeding generation.
Strengthen our financial foundations
Macro vision helps us understand the whole picture.
Financial education allows us to guide our economic legacy on the right path.
Emotional control helps our legacy grow while at the same time allowing us to enjoy our wealth.
So far we have been doing an excellent meticulous job but there may be a small, almost invisible enemy that can be just as precise.
The “Ant Expense” can be a mighty and fearsome enemy.
Small in size but great in consistency, it can do a lot of damage.
One of the Founding Fathers of the United States, Benjamin Franklin, coined a phrase that has endured through the centuries.
“Take care of small expenses, a hole sinks a ship.”
Small daily expenses are not worthy of attention for people with little or no financial education.
But those who know their legacy and have the goal to maintain it, avoid these small daily expenses as much as possible, or at least make a plan to reduce them to their smallest expression.
When we prepare the budget of expenses vs. monthly income, we will discover the existence of these types of expenses.
It is hard to pin them down because usually, these expenses vary weekly.
Identifying them is necessary and controlling and planning them is advisable, in cases where they cannot be eliminated altogether.
By taking these steps we will be able to see at the end of every year how our ship not only stays afloat but also increases its size considerably and we all know how much we can enjoy sailing on a good ship.
Divide and conquer
At this point, we already have a broad and well-focused vision of our economic legacy.
We know where it comes from, we have traveled the journey, and we know where we want to be headed.
Now that we have taken control of our destiny, we can take a big step: the diversification of investments.
Having the knowledge of our surpluses, profits, and investments we can study the possibility of investing in new business areas.
The broader vision that financial education gives us allows us to know where and how to invest capital.
Holding assets in stable areas is always desirable; and in the same way, the assets placed in promising areas can become a stroke of luck that can bring growth to our patrimony.
With these 5 Fundamental Practices, we have the best tools to take control of the ship and direct it toward stable and exciting waters. Most importantly, we can ensure that we enjoy the ride to building your economic legacy.
If you are interested in reading more about us, access our blog.
We invite you to subscribe to our Youtube channel, where you can find videos on topics of interest in corporate and fiduciary matters, among others.
