We used to think of financial success as a three-legged stool: Pensions, government benefits like Social Security, and personal savings.  Today, pensions for many of our clients are rare, and government benefits have the potential to diminish as a percentage of long-term retirement income.  As such, the burden of accumulating wealth now rests with the individual and their ability to build personal savings.

In this new paradigm, there are four pillars to financial success: Income, Expenses, Savings, and Investments.

1. Income

I recently heard about an old pilot in the southern U.S. who found himself penniless at age 78 and in seriously declining health.  The man said, “I didn’t put much in savings,” and never had health insurance because he “figured he’d work until he died.”  The man didn’t think he’d live this long.  Now he’s old and broke!  This man’s story highlights the importance of income management during your working years.

There are several ways to earn a significant income.  One could choose a career as a professional service provider; a doctor, lawyer, engineer, or architect.  Also, executives in substantial corporations often find opportunities for high income.  Some choose to run a successful small business.  Income serves as the foundation for one’s successful financial plan – earning higher income over the course of your career gives you the flexibility and ability to save and invest.

During my early years, my mother explained how important it is to choose an occupation that would pay me enough to enjoy my preference for nice things.  She knew me well and it was probably the best advice I’ve ever received.

2. Expenses

A word of caution: The key to building financial success is not solely dependent on one’s income level.  Rather, expense control is another factor in accumulating wealth.  Think of this as living well under your means.  I urge clients to find a reasonable and comfortable lifestyle given their capacity to earn.

It takes a while to understand that no one who really matters cares about what car you drive, where you live, the clothing you wear, or the technologies you own.  Regardless of how much you earn after taxes, if you cannot control your spending, you have little hope of (other than relying on inheritance) of building lasting wealth.

Some of the wealthiest people I know, those who are able to continue their lifestyle in retirement today, never made huge amounts of income during their careers.  Instead, they controlled their expenses and slowly, over time, built up sufficient wealth to maintain their lifestyle and needs in retirement.  There are plenty of high-income families who have less accumulated wealth than frugal individuals who made considerably less in earnings.  Think of this as a “get rich slowly” scheme!

3. Savings

If you have a good handle on your expenses, the next pillar, savings, should come naturally.  How much do you need to save regularly to achieve your goals?  First, you must define those goals.  A well-thought-out financial plan is like a road map, showing you the way to achieve your goals.  Financial planning is like the vehicle going down the road, anticipating turns, storms, slick spots with occasional maintenance stops and sometimes, major overhauls.

How do you know what to save if you don’t know where you’re going?  If you can’t or won’t save, you may not be able to reach your long-term objectives.  With the burden now resting with us and not our companies or the government for retirement, it takes a disciplined approach for many years to build one’s wealth.

4. Investments

It was my grandmother who ultimately taught me about the final pillar of wealth: Investments.  She urged me to save 25 cents of every dollar I earned.  At first, I thought she was nuts!  But in the following years, I saw the light.  She also told me not to touch my savings and make sure I didn’t put all my eggs in one basket.  In other words, she advised me to diversify.

A thorough and complete investment plan accounts for one’s ability to manage through volatile times, considers cash flow needs, income taxes, as well as the time horizon to achieve one’s goals.  At the end of the day, investing is more about earning a reasonable return for the amount of risk you are willing to take.  It is less about what you earn on your investments and more about saving enough money to invest and controlling for risk.

Stewart S. Koesten, M.S.F.S, CFP®, CIMA®, is the Chief Executive and Executive Chairman of Aspyre Wealth Partners with more than 35 years of experience as a wealth management advisor. For help with your specific situation contact Stewart Koesten at (913) 345-1881 or visit our website at We help successful people Master What’s Next® – whatever phase of life they are in.