This Issue: You Worked Hard for It - Now Preserve It

I’ve always been very outspoken about a college education. If you’ve got the brains and the financial assets to go to college, then there’s no reason not to go. It’ll give you an amazing leg-up on the rest of your life.

The question is, when you go to college, which major should you choose? I’ve always leaned heavily towards business, but there are plenty of other fields that obviously offer great opportunities.

However, recent studies show that liberal arts degrees, surprisingly, can be very useful in today’s world.

Liberal arts majors are in high demand across all fields because in today’s working environment it’s good to know a little bit about a lot of things. It’s important for workers to be able to handle many different tasks and often, if they’re too specialized, they’re not able to do that.

I know some people think liberal arts majors don’t appear very decisive about what they want to do with their lives, but not anymore. It’s important to be able to diversify.

They just have to figure out how to translate their broad skills into the mainstream workplace. But the opportunities should be much greater than for a philosophy major or an art history major trying to find a job. (Even though I happen to like both these subjects very much!)

Learn a little about a lot of things and the world is yours.

Why do smart people fail to prepare for unfortunate events in their lives? After all, bad things happen in even the happiest lives. They are predictable. Looking the other way isn't going to offer any safeguards from them. 

You and I might not like to think about it, but odds are that you or I will encounter one or more of the following problems at some point in our lives.

• A financial setback, such as the loss of a job or the failure of a businesses
• An illness that causes us to lose time at work
• A lawsuit that threatens our finanical well-being
• The expense of caring for aging or ailing parents
• A retirement lifestyle that will cost far more than we believed possible

When we fail to prepare, we are usually engaging in some kind of denial.  We look at a problem and think, "It will never happen to me." And that kind of thinking is dangerous. It can cause us to lose the wealth that we have worked hard to achieve. 

The curious thing is, it is usually not difficult to protect ourselves from major financial setbacks, provided we are willing to overcome our denial, admit that we are vulnerable and take simple steps to protect ourselves before problems occur.

I don't want to close this post on a negative note, but let me just say that when we fail to engage in wise estate planning, we are falling victim to the most dangerous denial of all. It might not be comfortable to sit down with an attorney and go through the process of putting together an estate plan, but it is actually one of the most positive things that you or I can do.  It assures that the fruits of all our hard work will benefit the people we love, not be double-taxed and claimed by the government.

I'd urge you to review your your insurance, your retirement planning, your will and the other components of your overall financial plan. Wise planning, not denial, will protect you and your family.  

1. Formulate a strategy. Realize that no matter how carefully and ethically you conduct yourself and your business, it is highly likely that you may be sued. One of the best ways to prepare is by learning how to write a business plan.
2. Recruit and organize professionals who can help you accomplish this goal. Most likely, you’ll need an attorney and an accountant who are both skilled at asset protection structures and methods.
3. Prioritize your objectives. Evaluate your overall financial situation, but in a way that doesn’t negatively affect your other financial planning objectives. Consider how a transfer of assets from one entity to another may affect your tax and/or estate planning. If you put your personal residence into a limited partnership, you’ll gain asset protection - but lose the tax exemption.
4. Measure your wealth. What assets do you have at risk, and how do you expect your wealth to change in the future? 
5. Be proactive in your planning. You can’t put an asset protection system in place after you’ve been sued. Unfortunately, people often think about how to protect their assets when it’s too late.

If ever there was a case to convince you that job security only happens when you own the business, you need only look to Dell Computer. They recently announced results that "blew away" Wall Street expectations. They made $759 million for the quarter and thanked their employees by announcing a planned layoff of 8,000 people, roughly 10% of their workforce.

There's no question they have been taking a beating recently and margins continue to erode in their space but that's what makes my blood boil about big business - you have no control of your future cash flow or career when you work for someone else. Unless you own a business you're letting someone else play your cards. I used to say that with one bad quarter you can be out of a job working for a big firm but here's evidence that even with a solid fiscal period layoffs happen. In fact, they happens all the time.

What's the lesson? It's simple: do whatever you must but get into your own business! If you're reading this blog you obviously have the desire at some level to own a business. Now, you must translate that into an all-out commitment to achieving your goal. Stay focused. Learn everything you need to know about buying a business and then do it. I promise that once you buy a good business you'll read articles like the Dell story and while your heart will go out to the poor folks who will soon be unemployed, you will, at the same time, have to smirk. Because getting laid off will never, ever happen to you.