The 6 Building Blocks - How to Build Your Unbreakable Financial House

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For many, building wealth from nothing can seem like an impossible dream. 

Between stagnant wages, rising costs of living, lack of financial knowledge, and countless get-rich-quick schemes, the path to true wealth creation is often obstructed by confusion and misinformation.

The reality is that sustainable wealth-building doesn't require luck or extraordinary circumstances. 

It comes down to understanding and implementing proven tips for wealth creation based on time-tested financial principles.

Martin and Chelsea Matthews, financial advisors and co-founders and owners of M Wealth Group, created the 6 Building Blocks framework to guide individuals and families through 6 key wealth principles.

They’ll help you strengthen your finances, mitigate risks, and ultimately achieve your financial goals through financial literacy. Read on for the best wealth creation strategy out there!

By understanding these wealth principles and taking calculated action, anyone can methodically construct an unbreakable financial house that generates lasting wealth.

The journey begins with an open mindset and a willingness to increase your financial literacy.

The 6 Building Blocks to wealth building are:

1. Cashflow: The Lifeline of Your Financial House

Without cash flow, the other wealth building blocks don’t matter. 

Understanding the dynamics of money flowing in and out of your accounts is important. You're on the right track when your income surpasses your expenses plus reserves. 

Start with Financial Tracking

Understand the dynamics of money flowing in and out. You're on the right track when your income surpasses your expenses plus reserves.

By tracking your finances, you gain empowerment and understanding, enabling you to take charge, and make necessary adjustments. Take responsibility and make decisions to increase your cash flow!

2. Debt Management: Managing the Good, the Bad, and the Ugly

Have you ever brought up debt, and next thing you know, you could hear a pin drop?

Debt often carries emotional weight. However, not all debts are harmful; good debt generates income, while bad debt detracts from your wealth. 

Think of it like this…

Good debt = money in your pocket

Bad debt = money out of your pocket

Being “debt-free” isn't the goal; having a strong financial position is. It's about having options, especially during hard times like job loss or illness. Effective debt management mitigates risks and creates a safety net around you and your family.

• Good Debt: Like investments in rental properties that generate income.
• Bad Debt: Expenditures like impulsive shopping sprees that deteriorate your wealth.

Remember: Being "debt-free" doesn't guarantee financial security. What if unforeseen adversities strike, like job loss or illness? It's all about strength and options. Don’t put yourself at risk by trying to be completely free of all debts.

3. Reserves: Your Financial Shock Absorber

Building reserves is about preparing for the unexpected without the “emergency” mindset.

Steps to Start:

• Open a separate bank account designated for saving or “reserving” money
• Decide on a percentage of your income to save.
• Set milestones: $100, $1,000, 1-month, 6-months, and a year’s expenses.

4. Proper Protection: The Guardian of Your Financial House

Life insurance is more than a death benefit; it’s a strategy for sustaining cash flow. 

It’s all about…“If I pass away, how do I make sure there’s still money coming in and continue to serve my family?”

Different Kinds of Life Insurance:

• Term Life Insurance: This is for a certain time, like 10 to 30 years. It helps protect your family during these years.
• Permanent Life Insurance: This one lasts your whole life. It's special because you can also save money inside this insurance.

Why Save Money with Whole Life Insurance?

• It can earn more interest than other places without worrying about losing it in the stock market.
• You don't have to pay taxes on the growth, which means more money for you.
• You can get to your money whenever you need it.
• It's a smart way to have extra money for buying houses or as a backup plan since you can borrow against it.
• Whole life insurance helps your family keep and grow their wealth over a long time, even after you're gone.

Even though life insurance might not seem as exciting as other ways to save or grow your money, it's a really important part of keeping your family's finances secure and protected.

5. Build Wealth & Avoid Your Wealth “Enemies”

Ethical wealth-building strategies are key, whether through business, stocks, or other vehicles. 

But beware of your three adversaries: taxes, inflation, and market risks.

Your Wealth Enemies

1. Taxes: Seek avenues with tax advantages when building wealth.
2. Inflation: Ensure your wealth growth is at least 3% annually to combat.
3. Market Risks: Protect against potential capital and opportunity losses in a down market.

6. Build Legacy: Enduring Wealth for Future Generations

Creating a legacy requires a well-thought-out legal structure. Having a will, trust, financial power of attorney, and healthcare directive is fundamental. 

By placing assets into a trust for your heirs, you ensure privacy and a well-structured transfer of wealth. It’s essential to have these desires documented to safeguard your legacy and uphold your wishes if incapacitated.

• Remember your must-haves: A will, trust, financial power of attorney, and healthcare directive.
• Trusts: By allocating assets into trusts for descendants, you ensure privacy and a structured wealth transfer.

Building a solid financial house becomes engaging and rewarding with expert guidance and the right tools. 

M Wealth Group will guide you in implementing the six foundational building blocks of your financial house: mastering cash flow, effective debt management, establishing reserves, ensuring proper protection, building genuine wealth, and crafting a purposeful legacy. 

You can access our video series to learn more about the 6 building blocks HERE. 

Secure your financial future with us and schedule a complimentary wealth review.