You bet! We call it “Prosperity Economics,” a term we use a lot here at Partners for Prosperity, Inc. And perhaps it’s high time we explain ourselves. Today we’ll take a look at what it is, how it differs from typical financial planning, and why it matters.
What do we mean by Prosperity Economics?
We didn’t invent “Prosperity Economics,” we’ve just coined the term for a financial set of principles and accompanying strategies that, for the most part, pre-date the strategies touted by popular finance gurus and Wall Street firms. While the strategies of Prosperity Economics are sometimes hailed as the latest greatest thing, they are actually more “traditional,” in one sense.
Put another way, Prosperity Economics hasn’t been so much discovered as rediscovered. And it’s the alternative, the remedy, if you will, to the financial shenanigans that sent portfolio values to the floor in 2008 and has since led to increased instability and public mistrust in all things “Wall Street.”
How does Prosperity Economics differ from typical financial planning?
The following chart gives an overview of the distinctions:
In terms of practice, Prosperity Economics shuns market speculation and chasing after the latest stocks. Although some Prosperity Economics practitioners may have holdings in the market, they are diversified into other investments that are not market-driven.
Retirement plans are funded to “match” level only, and sound investments with less risk and higher returns than mutual funds are utilized, such as bridge loan investments, life settlement investments, long-term real estate holdings, and indexed funds.
Car and insurance deductibles are kept high to minimize premiums, while permanent life insurance is used as a strategic tool, along with (oftentimes) temporary term insurance. Whole life insurance policies that build cash values are utilized to store cash, fund expenses such as vehicles, investments, even a college education, while deferring taxes and accomplishing other goals as well.
30-year mortgages are utilized and not prepaid so that homeowners can keep more assets under their control. (And as financial calculators prove, while perhaps counter-intuitive, this method saves the homeowner money once opportunity costs are factored in.)
Rather than accumulating for “retirement someday,” cash flow is built along the way so that freedom and fulfillment can be integrated into daily life while meaningful work continues. A “Prosperity Flow-Through Account” is used, and contributions to charities and non-profits are strongly encouraged.
The Guiding Principles
We have observed that Prosperity Economics is governed by a set of principles which we have identified as the Seven Principles of Prosperity™:
#1: THINK from a Prosperous Mindset
#2: SEE the Big Picture of Your Personal Economy
#3: MEASURE Your Opportunity Costs
#4: Focus on Cash FLOW, Not Net Worth
#5: Keep Your Money under your CONTROL
#6: MOVE Your Money Through, Not “To” Your Assets
#7: MULTIPLY Your Money by Getting it to Multi-Task
(These are just bullet points, but click the links above for articles that illustrate how to put each of these principles into action in your personal finances.)
Who practices Prosperity Economics?
- Mutual life insurance companies, who operate for the benefit of their insured members, with no shareholders to please and funnel profits to.
- Financial advisors who encourage consumers to start a personal or family bank rather than socking their savings away in a banking institution.
- Anyone who use calculators and software that “tell the whole truth” about investment options and opportunity costs.
- Multi-millionaires, and wealthy mentors who have long practiced these methods.
- Educators and authors such as Garrett Gunderson and Barry James Dyke who question the wisdom of typical financial planning and the motives of the institutions that sell flawed strategies to the public.
Look around, and you’ll find Prosperity Economics alive and well, under a variety of labels (even though it may not make headlines nearly as often as the list of “hot stocks.”)
Why it matters
In this day of market crashes, bailouts, Peak Oil prognostications, worldwide economic instability and “Occupy” protests, it is apparent that something has gone extremely wrong. Repeating the same strategies over and over again will not lead us out of this mess, it will only lead to more scarcity. We have gone astray, and our current maps won’t lead us home.
As Einstein said, “Problems can’t be solved with the same level of thinking that created them.” It’s time for a new economy based on new principles, and Prosperity Economics is a truly sustainable model that works.
Do you need a Prosperity Economics Advisor? Contact us today at (887)-889-3981, ext. 120 to discuss how you can apply the principles of Prosperity Economics to your personal economy.
And in the meantime, be sure to opt-in for our Prosperity Accelerator Pack to receive a summary sheet and a podcast from Kim D. Butler explaining the 7 Principles of Prosperity™ in more detail.