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The secret of the 5-15-80 percent rule

Originally posted: July 18, 2018 Updated on: July 18, 2018 by David Lewis

If you want to know why some people are financially secure and stable and why some people never seem to get their act together, just observe the 5-15-80 percent rule.

Was listening to a lecture given to real estate agents recently and the speaker was telling a bunch of agents the following:

5% of the general population create generational wealth. They save, invest, and figure out ways to pass that wealth on to their kids or grandkids and… they teach their children the value of that money so it doesn’t get squandered.

Some of this generational wealth is just a few million. Some of it is 10s of millions. Some of it is billions (with a “b”).

15% are “middle class”. They have some savings, go on some vacations, have decent Christmases, and can afford to buy “toys”. They’re not rich, but they’re comfortable.

When the true middle class retire, they are financially independent. They don’t make excuses for why they didn’t save enough money because they have enough money. They took the time to learn the value of money and they’re smart enough and honest enough to know they need money for their future financial security.

They don’t make excuses. They don’t overextend themselves. They make a dedicated and concerted effort to save money each and every month… no matter what. Even if life hands them a pile of lemons, they make lemonade, and so on.

But… usually they don’t have enough to pass on after they die.

Meanwhile, 80% of people in America will need to have their lifestyle subsidized by the government in some way, shape, or form, or get help from family when they retire or get old because… they never saved enough.

They spend most of their money on stuff they didn’t need or really want. They spent money on things to entertain themselves because they were chronically bored with life or wanted some sort of escape from a hellish job or because they felt that any extra money they had was burning a hole in their wallet or purse. They always made excuses for why they could never save money. They refused to listen to reason or logic… instead they put their fingers in their ears and hoped and prayed everything would work out… somehow.

But they never think about what that “somehow” is.

The amazing thing about all this is that most people start with nothing in life.

And yet somehow 15% end up with enough money to be comfortable their whole life (not just “weekend wealth”).

Question is… do you want to be in the 80% or the 15%?

Or maybe even the 5%?

It’s up to you.

Anyway, if you want more tips and advice to get your wheels moving, go jump on my email list, now.

Filed Under: Financial Planning, Saving Money Tagged With: debt and savings, financial planning, investing, saving, saving for retirement, saving money, saving money for college, saving money now, saving money tips, saving more money, tips for saving money

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David Lewis
Life Insurance Specialist | Registered Financial Consultant | Author

What Others Are Saying (The Good, The Bad, The Ugly)


Comments from people who love Yours Fatherly…


*****

I found your comments about the ‘be…own bank’ stuff straight to the point and (maybe) helpful. — Joe

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I have known David for many years now and can say that he is a very honest and knowledgeable person and a great financial advisor. His insights are always backed up by tedious research and he has a real passion for helping people with their most important financial decisions. My gut tells me that after working with David you will likely feel like every stone has been uncovered and you will be confident that your financial well being is in good hands and you will be on your way to feeling financially secure. I do not regularly endorse other advisors in my field but I feel comfortable giving a strong thumbs up for David. — Antonio Filippone, Registered Financial Consultant

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Keep up the good work..I like reading your emails. — Kelechi

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Just read through your term v whole life blog from 2015, found it very well done and emailed it around the office here (I’m a CFP with [company name removed] ). — Doug, CFP

***

I read your very thorough discussion of the IBC on on nuwireinvestor. I wanted to thank you for providing such relevant content on the subject.

I found your piece very well done and I found your explanations very analytical. Thank you for that service to readers.

…Content creators like you inspire me and I’m so thankful that we live in an age where so much knowledge is available to us. — Wayne, Dentist

***

Watched your video on time value of money and whole life compared to other investments. Very interesting. — Alex, property and casualty agent

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You are a breath of fresh air. Thanks. — Bob

***

After speaking with several brokers, I decided to work with you because you were the most informed across numerous life insurance companies and the nuances of their policies. You helped me select a policy with twice the internal rate of return than the first quote I had received from another broker. Life insurance is now a significant part of my estate, and I look forward to working with you for many years to come. — Keith, Public Relations

***

Life insurance as it exists today is undoubtedly a pale imitation of what it could be in a free market, but in terms of safety (and other utility), it’s the best option I’ve discovered so far.

There’s still a lot I need to understand about how life insurance works as a long-term savings vehicle, but for now I’m at least satisfied that some of my money is a little safer from theft and wildly arbitrary taxation.

It’s too early to tell, but I’m cautiously optimistic. I’m currently putting about 20% of my savings into life insurance, with the rest split between precious metals, investments, and traditional retirement accounts.

I wish life insurance could offer a better rate of return, but with an out-of-control pirate state sailing the financial seas, pillaging with impunity, I’m happy to have some measure of safety, even if it means giving up a lot of potential profit. — Tim, Self-Employed

***

At first, I was a bit shocked at your extremely informal writing style, but it has grown on me. I actually look forward to your emails and the intriguing stories. The style breaks up the monotony of the other emails. Your emails have gotten my butt in gear to create my long and short-term financial plans.

Your writing and book recommendations have been an immense aid in teaching myself better finance principles and proved to me that it is very important to save money for all of those opportunities and curve balls that life throws at you.

I am now the happy owner of two life insurance policies, and I am armed with the knowledge to use them effectively. Thanks! — Tom, Nuclear Engineer

***

Once the concept of whole life started to click, I was very sure this was the direction I wanted to go. You showed me how to get there and tailored my policy to meet my particular needs and comfort level- well, we pushed that a bit, but I’m glad we did.

My only question is, where were you 30 years ago to take me down this road? — Shari, Grant writer

***

Your meticulous attention to detail assures me that I know exactly what to expect. You’ve given me a different perspective about making my money work for me. I actually feel I have control. — Marilyn, Legal Assistant

 


And Now… Comments from the haters!


“Whole life is what scam-based insurance people like David Lewis use to make a lot of money in commission at your expense. Get term life insurance. Never mix investing and insurance.” — L.C.G., self-proclaimed financial expert and forum moderator; [location withheld]

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“You ‘talk people into’ buying whole life insurance policies, which I personally think are not just a bad investment, but verging on a scam.” — R.F., Real estate investor and developer; [location withheld]

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“According to David, most advisors are ideologues, spewing the failed practices of the companies who control the financial service industry. Only his way of doing things puts the client first.” — Joe, Financial Advisor [location withheld]

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“David, I understand that you’re using Ayn Rand’s premise…

Well, you’re entitled to your viewpoint. But, I consider a flat dismissal of the codes that professionals have, for centuries, developed, refined, and attempted to live by to be absurd — and, frankly, rather silly.” — J.O., Financial Planner [location withheld]

***

“I couldn’t disagree more with your view of the financial services industry.” — C.G., Certified Financial Planner [location withheld]

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