Not worth your time to look around and save a few cents per gallon on gasoline?
Or how about those impulse purchases, where you see something and pick it up without comparing prices? Maybe not even looking at the price?
All of those little things make paying for your retirement just that much harder, according to an expert.
Personal financial manager Jody Tallal explains, in his brand new book “Billionaire Cab Driver: Timeless Lessons for Financial Success,” the importance of those few pennies or dollars.
“You have a finite amount of money that you’re going to receive every year,” Tallal said in an interview on “Revealing the Truth” with Rabbi Eric Walker. “Now, I don’t know what that is, but I can promise you on the last day of the year it won’t be one penny more or less than what it is.
“The same thing is true for your lifetime. You have a lifetime of income. It’s finite. At the end of your lifetime of earnings you can go back and say that’s exactly how many dollars I had to live with. How well you use that money every year, and whether you get the highest and best use of that money, is going to determine where you are in your future.”
Getting the “highest and best use” of your money is probably the most important concept in financial planning, according to Tallal. People can assure a much more financially comfortable future for themselves if they replace part of their consumption with investment today. All it takes is the discipline to postpone elevating your lifestyle for a little while.
“If a person, while they’re starting to earn more money, can learn at the same time to put aside some of that money, and that money can grow, that becomes like children,” he explained. “You put them aside, they’re going to grow up and they’re going to have a family, and you put in more money the next year and more money, ultimately that family starts to grow into children and grandchildren and great-grandchildren, and you can start using the returns on those investments, which are the children and great-grandchildren down the road, to buy the things you want today and have a lot more than you would have if you just started today consuming everything you earned.”
Tallal said too many people fall into bad spending habits and fail to think long-term. He warned people if they don’t set aside money for retirement on a regular basis now, they will have nothing when they get to be 60 or 65 years old and will end up dependent on their Social Security checks, which is not much money on which to live.
In fact, he said when it comes to investing, time is more important than quantity of money.
“My father at one point asked me, would I rather have a million dollars or a penny that would double in value for every one of the 64 squares on a checkerboard,” Tallal recounted. “Now, the answer’s kind of a trick: the penny. The penny grows to a number that is so large I can’t pronounce it; it has 18 zeros after it.”
The squares on the checkerboard represent time, he explained. The sooner you start investing, the more time your money has to grow.
“If I can start [investing] just a little earlier, I can have twice as much money,” Tallal said. “That becomes a big motivator, and when people have the proper motivations, they usually get pretty good at getting what they want.”
He said it’s important to realize everyone has a conscious mind and a subconscious mind, and although the subconscious mind is physically much bigger, the conscious mind controls what the subconscious mind does by programming it with conversation. Tallal compared it to planting a field: The field will indiscriminately produce based on what type of seeds are planted in it. If a farmer plants corn seeds, the field will produce corn, but if he plants dandelion seeds, the field will produce dandelions.
The human mind is the same way, he insisted.
“So the idea is to learn to program your mind with positive seeds, positive things that you’re projecting,” he said. “You give the task – it’s like you give it to God, you let that go into the back of your mind, and then it starts to direct your actions subconsciously towards what you’re trying to achieve.”
Tallal learned to plant positive seeds in his mind long ago. He read a book called “I Can” by Ben Sweetland that taught him how to program his mind toward his long-term financial goals.
Lo and behold, when Tallal programmed his mind, he achieved his goals. He continuously programmed his mind for fantastic things to occur, and they kept happening. It got to the point where he was worth $38 million by the time he was 35 years old.
Tallal is now offering his secrets of success in his new book “Billionaire Cab Driver.”
Written as a parable, the book tells the story of Akamai Kane, who started out as a poor boy working in the sugarcane fields on the small Polynesian island of Kiki Loa. When he eventually got a job at one of the island’s few inns, a traveler came through and taught him many of the tricks of financial success. Kane implemented this advice and grew wealthy, eventually becoming worth $20 billion.
Everybody wanted to know how this man went from humble origins to $20 billion. Kane didn’t want to spend his life giving interviews, spilling his secrets to everyone who asked, so he held a contest to select one writer to come interview him.
The book is written from the perspective of Dan Langston, the one lucky writer chosen to tell Kane’s life story. Langston spends one day with Kane on the island, riding around in the rich man’s cab. Kane points out various things happening in nature and shows Langston how those laws of nature apply to finance as well, and how people can use those laws to change their lives for the better.
“The whole goal of the book is to make it fun, so you can learn through this fun story all these critical processes and philosophies that are necessary to have a successful financial future,” Tallal said.
While he presents many processes and philosophies in the book, Tallal told Rabbi Walker anyone searching for the one financial golden rule will be disappointed because there are no golden rules in finance.
“The situation is changing, it’s volatile, it’s always shifting because of the fact that all of the factors in the economy – inflation, investment yield, income tax rates – all of these things change, and as they change what’s right and wrong to do also changes,” he explained. “So fixed concepts for a lifetime of ‘always pay cash,’ ‘never borrow’ – that may be perfectly correct today, but I could show you times back in the past where they were absolutely the worst thing you could possibly do.”
Tallal said his book contains formulas and rules designed to tell people what to do in various situations, based on shifting economic conditions.
One general piece of advice Tallal gives is to define your goals before you set out to achieve them. So when it comes to retirement, he recommends determining what year you want to retire, how much income you want to have when you’re retired, how much it will cost you to reach that income target (taking inflation into consideration), and how large an estate you need to have that, when invested, will produce that income.
“He gave a metaphor to illustrate his point.
“A captain of a ship in San Francisco going to Hawaii is going to arrive 99 percent of the time. However, if you or I got in a boat without any navigational training and we got our compass, we figured out where Hawaii was and we set sail, we would fail 99.9 percent of the time. The reason is once we set sail, we had that elusive little goal – it was a place on the compass, we were headed that way – winds blow us off course, currents take us in another direction, and if you miss Hawaii by five miles on the water, you won’t see it. You keep sailing and sailing and sailing and you’ll end up in Japan, further away than when you started.
“So you have to be able to identify clearly, articulate, what’s my goal? And you need to then define it.”
And if you don’t identify your retirement goals early in life, or if you are 45 or 50 and haven’t begun to save for retirement yet, just remember it’s never too late to start, according to Tallal.
“If you start today, you’ll have a whole lot more than if you don’t do anything,” he assured. “You may have to work longer, you may not get to retire at 65. You might have to work to 72 or even 75. But you’ll have security later on after that. You have to start. So if you missed the boat at 20 or 25 or 30, which 95 percent of us did, it’s never too late to get on the train and start traveling in the right direction, where you want to go.”