When did you last assess the Capital Efficiency of the Principal Financial Elements in your business?


Most businesses we review have Economic Inefficiencies in a number of areas.

Addressing just one can immediately increase profits.

Contemplate what you might achieve by a make over in just a few?

The most obvious element to work on is where there is often a disconnect – such as between HR and Accounting.

How are Wages Structured? Where, How and by Whom are Wages Budgets determined?

When you engage New Talent how is their Salary designed?

In most instances HR adopts industry standard for specific worker classifications.

Rarely is there Economic Analysis or a look at Efficiency of the Money being spent in total by the business – in addition to the actual salary and certain benefits, on-costs are badly managed. A general approach most businesses take in hiring is to just accept what crawls out.

With no disrespect meant to HR people – their FORTE is in managing human animals and not money. Regrettably there is a divide between Personnel & the Bean Counters. When the bottom line counts the GM or business owners need to be concerned about all financial decision making and assess the efficiency of money being spent in every area of a business.

In many instances not just department managers but also the principals of the business should upgrade their knowledge and skill in financial management, tax, retirement planning, budgetting, finance, purchasing, sales and marketing, and any area where money, costs and profits are focal points for a business.

To highlight a few gapeing financial holes examine salary packages of just a few of the more highly paid workers and see what is left on the floor and also what drains away.

Take a step back; looking at total cost of a wage packet identify each area of Cash Flow; see how slices are carved off an employees packet, what are the amounts and tax rates.

Dive in further and examine the special concessions – such as 401k – where both Employees & Employers can obtain benefits.

To what extent are workers and employer utilizing the special benefit which IRS have generously made available to encourage Retirement Planning.

This is a massive chasm ignored by Business Owners, Beyond the comprehension of most employees, and baffling the professionals posing as experts – yet wear a dunce’s hat.

Itemize the Financial Tree’s Branches as follows – with the appropriate tax rate against each:

Employee Gross Income:


Ee Federal Income Tax:


Total Payroll Tax:

$15,300.00 *(shared – 7.65% each – worker/employer)

Total Tax Liability

Avg. Effective Tax Rate
Marginal Tax Rate


State Tax

Local Tax

401k Maximum Contribution **(worker under 50)

$19,500 Pre-tax 401(k) Contributions

Tax Liability $26,309.50

401k Matching Employer Contribution


Employee Marginal Tax Rate 29.65%

Employer Income Tax Rate 21%

Observe when there is a Matching Employer 401k Contribution the employee makes a 100% tax free return – *When Gearing is used ROI is between 300% & INFINITE

How many Employees contribute maximum to their 401k

How many use Gearing?

How many have employer matching contributions?


How does an Employee make maximum contribution if they do not have sufficient discretionary saving ?

How does an Employee get their Employer to make a Maximum Matching Contribution?

We have the answers – which are proprietary.coffee break

Schedule a Discovery Session to Learn More

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Worker pays Contribution from Wage $19,500

Tax Rebate of $4,000

Shortfall in Disposable Income $16000

Salary Sacrifice of $20,000

Shortfall in Disposable Income $15,200

Employer Contribution $19,500 –

Fully restores After tax Shortfall on Disposable Income PLUS $4,000

401k Fund Balance is $39,000 Picking up Tax Gain of $4,000 on after tax cost of sacrifice

Worker can access $19,500 Plus the $4,000 Tax Rebate = $23,500

Applied to Shortfall 1 there is a Surplus of $7,500

Resultjng in a net deficiency on their Personal Contribution of $12,000

Covered by external Borrowings

Universal Life Plan Investment (Real Estate, Equities or Alternative Investment) $20,000 (year 1 no borrowings from investment) funded by 401k Loan

Effective Cost of $20,000 Investment $16,000 (Year 1 – requires External Borrowings)

Year 2 $20,000 Premium paid by loan from 401k Plan

401k Personal Contribution funded by Loan from Universal Life (commencing in year 2 @ 90% of Balance)

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