The Formula of Wealth

Recently I had the opportunity to present to the adults in our Church Family about budgeting and investing. I had a co-presenter, a young mom in the ward who has taught classes on budgeting in the past and is very good with her family’s finances. We each were able to take 20 minutes to talk on the subject and I was left wishing I had more time to dive deeper into the basics. Since I didn’t, I’m going to share them with you, and you can pass them along. This will be fun, we’ll start a ‘Money Tree!’ LOL…the good kind, of course.


I distinctly remember one of my first business professors writing the following formula on the board early in the class.

Revenue – Expenses = Profits

Not sure why this concept was so mind-blowing for me because it’s so simple. The revelation came to me then that if you want more profits you need to either increase revenue or decrease expenses. If you really want to increase profits you do both. We can apply this formula in our personal finances as well. Now you too can be mind-blown!

Income – Expenses = Savings and Investments

Here we just changed the words to better reflect personal finance. Same rules apply, if you want to have more money for saving and investing then you either need to increase income or lower expenses. If you want to super-size your savings and investing. then you do both. But now, let’s switch up the formula up to better reflect how we should approach our personal finances.

Income – Savings and Investments = Expenses

This formula screams with excitement “PAY YOURSELF FIRST!”

This is where wealth becomes possible. I wish this were an instinct we were all born with like catching ourselves before we fall. We are born naturally driven to stand on our own two feet and this formula represents that beautifully.

Don’t let spending and the resulting expenses keep you from getting up and standing on your own two feet. Don’t let lack of resources restrict you from living life on your terms…. whatever that may be. This formula is all about discipline.

My mother-in-law once told a story about my wife, Stephenie, who is very private. She was born this way apparently because her mom was beginning to think that at 14 months she was never going to walk. Then one day, Stephenie saw something across the room that she wanted. Without hesitation, she stood up and 2 walked across the room like a seasoned pro to fetch her treasure and then she went about her business like it was no big deal. This tells us, she was practicing when no one was watching. Those that practice the principle of paying themselves first aren’t boastful about it, they often live in modest homes and drive modest cars. But by golly, they stand on their own two feet and when they want something, they don’t have anything holding them back to get it.

Do this. Pay yourself first, then budget the rest.

Take note, if you have consumer debt, your first steps are always to have 3-6 months of an emergency fund in the bank, and aggressively attack that debt. Get it gone. This needs to happen before proceeding to the investing step.

The next letter I send you will be HEAVY…. we’re going to talk about the BIG STUFF that often gets overlooked. Let me know if you have any great ideas as you think about your family’s finances, I enjoy hearing from you. As always, if you’d like a more detailed discussion of your situation please feel free to drop me an email or give us a call. 509-628-1358

Monson Wealth Management Flat-Fee Program

Most Registered Investment Advisors charge a percentage of assets under management, which translates into the more money you have, the more you are charged, even though the servicing time may be the same as someone who has one-quarter of what you do.
Our Flat-Fee program is designed with these clients in mind. We don’t charge you more just because you have more.

Give us a call and in 15 minutes we can assess your situation to see if this makes sense for you.

“The MWM Flat-Fee Program is designed to give clients that have over $500k invested a fair shake.”

Eldon Monson CFP®, RICP®
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Live Life On Your Terms

Whether you want to travel more, do things you’ve always wanted to do, or just spend more time with the grandkids, we want to be your guide to help you get there.

Live Life On Your Terms

Whether you want to travel more, do things you’ve always wanted to do, or just spend more time with the grandkids, we want to be your guide to help you get there.