Reaching Your Personal Financial Tipping Points

by William P. Meyers

Chapter 1

The Importance of
Your Personal Financial Tipping Points

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Tipping points are events where a small change causes a much larger change. The proverbial straw that broke the camel’s back is an example of a small thing tipping life (for the camel and its owner) to a very bad outcome.

This book will concentrate on positive financial tipping points. They are not as dramatic as a camel’s broken back. Each tipping point represents passing a threshold as you increase in your financial health. Reaching a tipping point enables you to live a better life and accumulate more net income and wealth faster and with less stress.

Another non-financial example of tipping points comes when you are fighting off an infection. Say you have caught a virus. The disease progresses because the germs start multiplying. At some point there are so many that you develop symptoms. Your body’s immune system starts producing antibodies when it learns of the infection. At first the virus is multiplying faster than it is being by the antibodies; you feel worse. As antibody production accelerates your body tips past a point where more germs are killed than are born. You start getting better. The next day you are up, wondering why you were ever ill. Note that the first tipping point in this example is when the immune system starts producing antibodies. If you don’t have that, you can’t get to the point where the number of viruses in your body is going down.

You may have heard of the millionaire next door, the person with an ordinary job or business who is far wealthier than other people with similar jobs. If you have any experience in life you also know about the bankrupt person next door. How can two people or families with the same incomes end up with such different outcomes? The answer is almost always that the millionaire reached his or her personal financial tipping points (usually with some effort; rarely by luck). The millionaire decided, early on, to prioritize reaching the First Personal Financial Tipping Point.  Once the first tipping point is reached, the other ones on the path to being a millionaire are much easier. But the bankrupt person, sometimes through bad luck but usually because of bad decision making combined with lack of effort, never reaches that crucial First Personal Financial Tipping Point.

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Copyright 2008, 2009 by William P. Meyers. All rights reserved.