How to Turn Income into Wealth

In this episode of the Health & Wealth Power Hour, Harlon Pickett sits down with financial expert Timothy Clifford to discuss how people can turn their income into lasting wealth. Clifford, whose career began on the trading floors of the Chicago Mercantile Exchange, shares his wisdom gained from decades in the financial industry, addressing common financial mistakes and offering practical advice for building long-term wealth.

Making Money vs. Building Wealth

One of the key takeaways from the episode is Clifford’s observation that “making money does not equal having money.” This distinction resonates with many people who may have a steady income or even significant earnings but struggle to accumulate lasting wealth. Clifford explains that many fall into the trap of thinking that a high income automatically leads to financial security, but without proper planning, that money can slip through their fingers.

“People who have money make different decisions than people who make money,” Clifford says. “And they’re actually very minor differences. Over a decade or two, it’s the difference between someone with two or three million dollars and someone with a couple hundred thousand.”

This is where the difference between smart financial decisions and impulsive ones becomes crucial. Clifford emphasizes that building wealth requires consistent, informed decision-making over time.

The Power of a Simple Financial Plan

Another major theme of the conversation is the importance of having a financial plan. Clifford stresses that a plan doesn’t have to be a complicated 40-page document. Instead, it can be as simple as a one-page outline that clearly defines:

Where you are financially (your income, debt, and expenses)
Where you want to go (your financial goals)
How you’re going to get there (strategies to achieve those goals)

This simple approach allows individuals and couples to stay on the same page and adjust as their financial situation evolves. Clifford highlights that even a basic plan can provide much-needed clarity and direction for people who might otherwise feel lost when managing their finances.

Diversification and Seeking Counsel

Clifford outlines three key practices that all wealthy people follow, even if they don’t consciously think about them:

They have a plan – as mentioned above, having a financial plan is critical.
They diversify – spreading investments across different asset classes, industries, and tax strategies is essential to mitigate risk and maximize growth potential.
They seek counsel – wealthy individuals understand the importance of seeking advice from professionals, friends, or even trusted informal sources. This allows them to gather multiple perspectives and make better-informed financial decisions.

Seeking counsel, Clifford notes, can often be the hardest step for many people, especially those who have built some level of success on their own. “Their egos get in the way,” he says, describing how some individuals resist seeking financial advice because they believe they already have the answers.

However, Clifford emphasizes the importance of both formal and informal advice. Whether through a trusted financial advisor or even conversations with knowledgeable peers, gathering diverse opinions can lead to better financial outcomes.

Common Financial Pitfalls

One of the most common mistakes Clifford sees is people failing to maximize their retirement accounts, such as 401(k)s. Many contribute only the amount needed to receive their employer’s matching contribution, but Clifford advises putting in as much as possible, up to the contribution limits, to take full advantage of these tax-advantaged accounts.

Another major pitfall is the misconception that a home is an investment. While a house may appreciate in value, Clifford argues that it should not be relied upon as a primary retirement asset. “You have to live someplace as long as you’re alive,” he points out, meaning that the value tied up in a home is not easily accessible for retirement purposes.

Why You Need a Predictable Retirement Plan

As people live longer, the fear of outliving one’s retirement savings becomes increasingly common. Clifford explains that people who build generational wealth plan for multiple streams of income during retirement. They don’t just rely on a single source like Social Security or a 401(k) but often have consulting gigs, investment income, or other side ventures that provide a steady cash flow. This creates a more predictable and secure retirement, allowing individuals to maintain their standard of living without worrying about running out of money.

Small Changes, Big Impact

Throughout the episode, Clifford drives home the idea that building wealth is about making a series of small, smart decisions over time. Whether it’s seeking financial advice, diversifying investments, or creating a simple financial plan, these seemingly minor actions can add up to significant financial success over the years.

If you’re ready to take control of your financial future, start by assessing where you are today and where you want to go. Remember, wealth isn’t built in a day—it’s built through consistent, informed decisions.

To hear more from Timothy Clifford and dive deeper into his financial strategies, be sure to listen to the full episode of the Health & Wealth Power Hour. For more information, visit Timothy’s site: https://www.planassist.com.

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