Prosperity Economics Principles, with Kim D.H. Butler
Kim Butler is a champion of Prosperity Economics principles
She’s the owner of Partners 4 Prosperity, a Registered Investment Advisory firm dedicated to the Prosperity Economics Principles.
Additionally, Kim serves as the co-host of the Prosperity Podcast and a best-selling author of 6 books, including Live Your Life Insurance and Busting the Retirement Lies.
She’s recommended by financial thought leaders like Robert Kiyosaki and has been listed in Investopedia’s top 100 most influential financial advisors in 2017.
She’s been a tremendous influence on the philosophy and work of The Money Advantage, and we have the utmost respect for her.
In this interview, we discuss her backstory. You’ll see how she developed her financial wisdom and how her abundance mindset is allowing her to continue her objective to help as many people as possible in as many ways as possible.
Where Prosperity Economics Principles Fit into the Cash Flow System
At The Money Advantage, we are a community of wealth creators. We are entrepreneurially-minded business owners who are taking control of our lives and financial destiny. We have a compass that always points back to the principles of wealth, not just to strategies or products. You need the right mindset, philosophy, and principles of abundance, expansive thinking, creation, cash flow, and control in place first before any financial tactics can genuinely benefit and serve you.
In the Cash Flow System, you first increase cash flow by keeping more of the money you make. Then you protect your money. Finally, you increase and make more.
This conversation on the Prosperity Economics principles of wealth creation fits right into the very first step of the first phase.
Here are the interview highlights:
Before Kim Started Partners 4 Prosperity
[3:30] Kim was a “typical” financial planner, with a Series 6 and 7 licenses to sell stocks, bonds, and mutual funds. She made her living creating and delivering financial plans.
When she became aware of the assumptions that made the plans unreliable the moment they were printed, she became disenfranchised with typical financial planning. She felt she was subjecting clients’ money to so much risk.
The Assumptions of Typical Financial Planning
[5:25] The client is responsible to project when they’ll want to retire, what exactly they would want to happen if they had died yesterday, what interest rate they expect to achieve, and what inflation rate they presume.
Because the foundation for the plans is complete guesswork, the plans have failed people as the roadmap they were intended to be.
An Entrepreneurial Journey That Started in 4th Grade
[6:53] When Kim was in 4th grade, her parents gifted her the raw materials for a business.
They gave her a milk cow and taught her how to milk by hand. She sold milk to friends and neighbors, earning an income. She had to keep track of her finances, manage expenses, collect payment, and pay taxes.
Giving up a Designation to Provide More Guarantees and Certainty
[10:00] Kim had earned and held the Certified Financial Planner (CFP) designation. To maintain her designation, Kim kept up with her continuing education. Time and time again, she found incorrect assumptions that she could no longer subscribe to. The questions and answers were simply incorrect.
She realized that the designation didn’t have weight or meaning for clients. If she had a designation at all, she wanted it to be about her clients, not about what test she had passed.
She gave up the CFP designation to maintain the integrity of her convictions and be able to provide clients with more guarantees and certainty.
Better Than Typical Financial Planning
[11:50] Prosperity Economics was developed based on historical principles you find in the Bible and books like The Richest Man in Babylon. It is basic economic theory and principles used in the corporate world, brought down to a personal level.
The 7 Prosperity Economics Principles
[13:15] Here are the seven Prosperity Economics principles that can be used as a guide to all financial decision-making:
- Think from a prosperous mindset
- See the big picture
- Measure opportunity cost
- Flow – create cash flow, into our life and out into savings
- Control – don’t give up control (in assets like the TSP, 401(k), 403(b), and IRA)
- Move – get dollars to move through assets instead of to assets
- Multiply – if we can move through assets, we can multiply their effectiveness and benefits, often called “velocity of money”
Why Savers Are Winners
[16:00] Robert Kiyosaki is often misunderstood when he’s quoted saying, “Savers are losers.”
If you look at savers as a noun – a person with an end goal to build savings – they are losers. Accumulating savings will never help you build financial freedom if the money just sits in the account and you never use it for opportunities.
Savers who save as a verb – a person who does the action of saving – are absolute winners. They have a consistent habit and process of spending less than they earn. They build up a sizable reserve to use for emergencies and opportunities.
Saving is the boring part of personal finances, but it’s absolutely critical and foundational.
Principles First. Then Strategy. Then Products.
[18:30] Start your financial foundations by building solid principles.
Then develop a strategy to accomplish them.
Only after this foundation can you determine which products make sense to best fulfill that strategy to achieve that principle.
The Principle Test
[19:00] The test for determining whether something is truly a principle is this:
Principle Test: Can you apply it to other areas of your life?
If it’s true for your health, your relationships, your business, your finances, your spirituality, it’s truly a principle.
The Multiple Facets of True Prosperity
[19:30] True prosperity is much more than just financial prosperity. It’s quality of life, physical health and well-being, relationships, your contribution, and your business. True prosperity is something that touches and improves every area of your life, today and in the future.
That’s the kind of prosperity to set your sights on and spend a lifetime building.
Failed Strategies of Typical Financial Planning
[20:00] One of Kim’s books exposes a bold truth, Financial Planning Has Failed. She outlined some of the commonly-used strategies that simply don’t work.
- The creator of the 401(k) plan, Ted Benna, has identified that it was a failed experiment.
- Prepaying mortgages is a common financial strategy that has failed families who have watched their equity disappear in a market downturn.
- Investments are synonymous with stocks, bonds, and mutual funds.
The Three Objectives of Money
[22:30] Kim is a proponent of having your money do three simple things. She discusses the tools and investments outside the stock market that she uses to help clients accomplish those objectives:
- Be liquid – You want a reserve of liquid cash to use as an Emergency/Opportunity Fund. The most efficient storage tool is cash value of whole life insurance. It’s a traditional product that has been around for a couple hundred years.
- Create income – Most people wait until they retire to have their money create income. They give up 40 years of learning to figure out how to create cash flow from assets. Bridge loans are real-estate-based investments that do this job well, creating solid, consistent monthly income, while also preserving the principal.
- Growth – The alternative asset class of life settlements provides growth over time. It’s been in the tax code since the early 1900’s and has been used by pensions, hedge funds, and the wealthy for many years. In the last 15 years, it has become available primarily to accredited investors (those with $1M net worth) or suitable investors. A senior life settlement is the ultimate win-win-win environment that works well for IRA money. The investor helps someone who is selling a life insurance policy. The seller can get more than their cash value of their policy by selling their death benefit.
An Honest Look at Risk Tolerance
[26:50] Kim shares that she has no tolerance for losing money.
If we were honest, many of us would be in that same position. But we’ve been so conditioned to think that to get returns, we have to take on more risk.
It’s an inaccurate correlation.
Higher risk doesn’t mean a higher reward; it means a higher chance of loss.
If you do use typical products like stocks, bonds, and mutual funds, make sure you’re adding strategies like stop losses to protect the principal.
[30:30] Behind every financial transaction, there are the people being served. With every investment and financial transaction, aspire to create a win-win-win scenario for everyone involved. Look for opportunities that create value for the investor, the company, and the overall economy.
It’s not just about the monetary exchange, but who is being served behind the dollar transaction. Recognize who you’re benefiting with each investment.
The Importance of Not Losing Money
[31:00] Most often, not losing money is more important than missing an opportunity to grow your money.
Consider what would upset you more: having money in an investment and losing a 10% chance to make money, or losing 10% of your money?
Most people would rather risk losing a chance to grow their money than risk losing money.
Beyond Building Her Business
[33:15] Kim’s husband, Todd Langford, is the developer of the Truth Concepts software and has a wide following of advisors.
Together, they founded the Prosperity Economics Movement for advisors and clients. Based on the success they’d achieved in their work, they wanted to expand and share software, strategies, access to alternative investments and processes with other advisors.
If they help one advisor, they help that advisor’s clients and multiply the overall impact of the Prosperity Economics principles.
Over time, she realized a singular goal to help as many people as possible in as many ways as possible.
The movement is non-profit, with a goal to supersede Kim and Todd’s lifetimes. They want to help people who are going against the status quo in their financial choices to embrace a more traditional way of thinking about money.
An Abundance Mindset Expands Your Vision
[36:30] Kim has developed an abundance mindset from going through scary times.
In 2008 – 2009, she got into a legal and real estate mess. They had a choice to either crawl into a hole and cry, or they could give. She chose to give. It was almost a selfish choice. It was the one thing she could do to give her time, energy, and thought processes. If she could give clients a thinking exercise or a positive way to see past the challenge, it built her confidence. It helped her get clear that giving was the way to get awesome results.
Giving of our time, talents, resources, compassion is the catalyst that allows dollars to flow into our lives. It may not be immediate or direct, but you expand the world for other people. That’s truly rewarding.
The Value of Thinking for Ourselves
[43:00] We get in a rut when we don’t think for ourselves.
There’s a growing movement of people who want to take back control of their financial life.
When you take control of your thinking, you’re able to take control of your life, your health, your money, your relationships, and even your political life.
That is entrepreneurial thinking. And that’s really traditional.
How to Find out More About Kim Butler
[44:55] Listeners can find and follow more information on Prosperity Economics principles at Prosperitypeaks.com.
Advisors can visit ProsperityEconomicsAdvisors.com.
Or you can check out her client work at Partners4Prosperity.com, including her Prosperity Podcast, blogs, and books.
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