You are a high performer. You either are bringing in a lot of income or you have the mindset needed to do so. Congratulations! But you aren’t there yet. Just being a high performer doesn’t mean you are all set in your life. You need to start doing the things that high performers do to secure their future.
Secure Your Future
High performers are everywhere. Many of my colleagues in the hospital are high performers. They bring in a large income and feel very comfortable. Whenever they increase their income they see an opportunity to buy a new sports car or boat, or upgrade their house. Their problem is that with each new purchase, they are purchasing a liability. This new thing brings some joy for a while, but also brings a monthly payment. When it breaks down, they are taking it to the expensive foreign car dealer. That’s a liability.
What they should be doing is looking for every opportunity to increase their income/expense gap. They should be paying down bad debt and not incurring more. They need to keep increasing that income, but using that income to produce more.
High performers are just like other people in that they have a definite lifespan. They won’t be able to continue working those long hours and making that high income forever. If they aren’t planning for this eventuality, they are headed for hardship. The day they get sick or injured, the income goes way down, but the liabilities are still there.
What are Your Liabilities?
For starters, your fancy mansion you just bought. This is the trickiest one and one that many don’t notice. If it is not producing income for you, then it is a liability. Liabilities are like a pig that eat everything your assets produce. On your house, like your car, you will be regularly doing repairs to your house. “But it appreciates!” you say. That’s great but don’t ever rely on appreciation. If you sank one million dollars into that building how much appreciation do you need to match what you could be getting while investing in other areas? Appreciation is not an investment. It is gravy that you can get on your good investments. Your primary residence is not one of them. It is a liability.
Other liabilities are your car, your student loans, your other loans, and your credit card balances. Anything you pay monthly or annually is likely a liability. Some are necessary, most are not. Seek to get rid of these as much as possible.
Income Expense Gap
Increase this gap. In business we call this cash flow. This is the amount you have left over from your income after all expenses are paid. This money is now earmarked to purchase you assets. Don’t purchase liabilities.
What are Your Assets?
Simple: these are anything that produces you income greater than expense. They are like an engine that produces work. They take certain maintenance to keep them going but they give you more back than they take, as long as you take care of them. These are typically your investments. Your job is not one of these. It is not a thing. You are the asset, not your job. Other assets are your 401k stocks and real estate holdings. These things have the potential to keep producing even when you have arthritis and can’t type on the computer any more.
Increase your assets, decrease your liabilities. Keep a list. Watch them over time. That’s what high performers do.