EP 73 – Different Approach of Financial Planning Addresses ‘The Missing Middle’

Common Sense Financial Podcast

Episode Intro

Emergencies and retirement. This is what we’re taught to save for. But what if you created a different system, which allowed you to pay for the expenses you will incur between now and retirement age – without losing the ability to build wealth?

Find out why you may need to rethink your financial planning approach and what you should do about the “Missing Middle.”

Show Notes

  • According to popular opinion, sound financial planning advice typically consists of two main steps: saving for emergencies and saving for retirement.
  • Brian found this to be slightly misleading because of the phenomenon he refers to as “The Missing Middle.”
  • Think about how life generally goes: there are car payments, furniture, credit cards, tuition… you also have money going into an account that you can’t touch until you’re 60 and then, before you know it, you have thousands of dollars of debt. And that’s by following general advice.
  • However, opting for a less traditional and more customized approach allows you to pay for the expenses you incur between now and retirement – the middle of your life, without entirely losing the ability to build wealth.
  • Brian believes that the real benchmark you’re going to use should be based on your personal needs, goals, and financial situation.
  • When there are big expenses people don’t account for in their regular cash flow, one of two things happens.
  • People either continually deplete savings in order to pay for the things in cash (constantly funneling money back into their bank account to replenish the emergency fund).
  • Alternatively, they finance everything with bank loans and credit cards. Neither option leads to wealth being created.
  • Brian is convinced that you should model your entire financial life around your actual life, instead of around arbitrary concepts or ideas that don’t fit into the puzzle of what you’re actually trying to create (Brian calls this Your Life Cycle Model).
  • In the Life Cycle Model individuals allocate resources over their lifetime with the aim of avoiding sharp changes in their standard of living, while avoiding debt and simultaneously building wealth.
  • Brian explains how using the so-called build banking instead of a traditional bank can help you leverage the Life Cycle Model (and why you shouldn’t compare it to the stock market).
  • People tend to separate their money into two buckets: saving and spending. Brian explains why that may not be the best of approaches – and what to do instead.


Mentioned in this episode:



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