A cash cushion, or emergency fund, serves as a foundational component to any well designed…
Looks can be deceiving.
We’ve heard the idiom countless times since childhood.
And yet, we fall for it over and over again.
Few things are as powerful as the mirage of money.
From the outside, Theranos, a health tech corporation, had it all. A brand new headquarters in Silicon Valley, a $10 billion valuation, and a visionary CEO who was also the youngest and wealthiest self-made female billionaire in America at the time.
Such an impressive display of wealth tends to lend itself credibility in the public eye. Surely, you might not have understood how their blood testing systems worked, but at a $10 billion valuation and the “next Steve Jobs” at the helm – Theranos must be legit, right?
Even if you haven’t read “Bad Blood” (amazing book!) you can sense where this is going…
Investors of the company were sold a vision. The hype, flash and money attracted some of the most influential investors in the world. They weren’t, however, allowed to see under the hood – the operational disaster, the poor management, the flawed product. The company’s impressive valuation meant very little when the cash being raised was simply thrown into a burning fire. If the underlying infrastructure of a company is flawed, it doesn’t matter how much money is raised from investors, the cash may prolong the outcome, but there is inevitably only one scenario- bankruptcy.
Theranos may seem like an outlandish corporate example, but how often do we see the mirage of money in our daily lives?
Big houses, flashy cars and fancy clothes. It’s easy to equate these material possessions with success. But remember, we can’t see under the hood. We might not be seeing the mortgage they potentially can’t afford, the credit card debt that could be consuming them, or the empty bank accounts.
The success may be an illusion. Living beyond our means is a fairly common trap we fall into and is difficult to recover from. We often think our income will catch up and then we will be back on track, but that is not always the case. Like Theranos, if the systems and processes in place are a disaster, it doesn’t matter how much your income rises, the outcome will likely be the same.
Unfortunately, this comparison isn’t a stretch. Look how common bankruptcy is with people who come into money quickly. Athletes, celebrities and lottery winners have a horrific track record. Why? They never built fundamental systems to deal with wealth.
This is why it is critical to focus on developing great processes as early as possible. The proper financial infrastructure ensures success in the long run. There will be no illusion to the confidence you permeate as you take financial control.
If big houses, fancy cars, and flashy clothes are part of your vision board – establish the structure now so that your system can make those dreams a reality. As time goes by, your priorities may change. Flexibility is part of the beauty of a great financial plan.
What is your definition of wealth?
Would you rather look wealthy or be wealthy?
We’d love to find out. Talk to us today and let’s develop a plan to reach your goals.