3296: The Four Best Financial Assets by Christine Luken on Money Goals and How to Build Wealth

Summary

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Episode Overview

Title: The Four Best Financial Assets
Host: Diania Merriam (Optimal Living Daily), reading and commenting on an article by Christine Luken
Date: September 26, 2025
Theme:
This episode explores the four best financial assets anyone can cultivate, regardless of age or current bank balance. While conventional assets like stocks and real estate are valuable, Christine Luken outlines foundational assets—credit score, income, net worth, and financial IQ—that empower individuals to build lasting wealth. Diania offers her perspective and practical takeaways, particularly on the role and relevance of credit scores.

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Key Discussion Points & Insights

1. Rethinking Financial Assets (01:00)

• Christine introduces the idea that the truly foundational financial assets are not traditional investments, but personal markers and skills accessible to everyone:
  • High credit score
  • High income
  • High net worth
  • High financial IQ

2. #1: High Credit Score (01:15)

• Why It Matters: A high credit score enables you to borrow at better rates; low scores mean higher interest costs and limited financial options.
• Example: Christine contrasts the cost of a $200,000 mortgage at various credit scores:
  • Stellar credit (3.92%): Baseline
  • Average credit (4.92%): "Will pay $42,572 more in interest than the one who has the 3.92% over the life of the loan" (02:20)
  • Poor credit (5.92%): "Will pay $87,553 more" (02:30)
• Actionable Tip: Pull your credit report, check your score, and work to improve it to avoid overpaying when you borrow.

3. #2: High Income (03:00)

• Why It Matters: "Your income is typically your biggest wealth-producing tool." (03:10)
  • High earnings enable savings, investments, retirement contributions, and other asset purchases.
• Caveat: High income is only powerful if not overspent: "A high income is only an asset if you don't spend it all." (03:35)
• Ways to Increase Income:
  • Ask for a raise or internal promotion
  • Work overtime
  • Switch employers for better pay, and counteroffer: "Most companies withhold about 10% from the first offer." (03:55)

4. #3: High Net Worth (04:10)

• Why It Matters: Net worth is your financial cushion, providing stability through life's challenges.
  • Definition: Assets minus liabilities (04:15)
• Key Point: It's possible to have high income and credit but a low net worth if spending outpaces saving.
  • Memorable quote: "I've known people with moderate incomes and less than stellar credit scores who have built a high net worth... by spending way less than they make and investing wisely." (04:45)
• The Value: Offers resilience during job loss or illness, providing resources as you recover.

5. #4: High Financial IQ (05:05)

• Why It Matters: The most crucial asset—your knowledge and skill with money:
  • "Even if you lose everything... you have the tools to recover all of them." (05:10)
  • Reference to stories of millionaires rebuilding after failure due to strong financial acumen.
• Acquiring Financial IQ:
  • Listen to podcasts
  • Borrow books (e.g., Napoleon Hill’s Think and Grow Rich)
  • Watch YouTube videos
  • Read finance blogs
• "Applied knowledge is like a magical superpower." (05:30)

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Diania Merriam’s Commentary (08:39)

• Reflection on Credit Scores:

  • "While I have a high credit score, it's never been something that I've been really focused on."
  • Critiques overvaluing credit scores: "It's simply an indicator of your ability to pay back the money you borrow... You could be drowning in debt with a fantastic credit score if you make payments on time and have a low utilization of your overall available credit."
  • Recommends focusing on net worth as the true indicator of financial health.
  • Shares personal habits—using credit cards for points, paying in full—not to boost credit score, but for convenience.

• Key Takeaway:

  • "When it comes to your credit score, there's a point of diminishing returns. To qualify for the best rewards credit cards, a home mortgage with the lowest interest rates or personal loans with the best terms, you usually need a solid job history and income, a record of responsible credit use, and a FICO score of 720 or above." (08:55)

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Notable Quotes & Memorable Moments

• "A high income is only an asset if you don't spend it all." – Christine Luken (03:35)
• "If you have assets and money in the bank, you can take care of your expenses while you recover your health or look for another job. This is why it's so valuable." – Christine Luken (04:50)
• "Knowledge is power. But applied knowledge is like a magical superpower." – Christine Luken (05:30)
• "I've known people with moderate incomes and less than stellar credit scores who have built a high net worth... by spending way less than they make and investing wisely." – Christine Luken (04:45)
• "There's a point of diminishing returns [with credit scores]... Usually you need a FICO score of 720 or above for the best terms." – Diania Merriam (09:00)

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Timestamps for Key Segments

• 01:00 – Christine's introduction & reframing the concept of financial assets
• 01:15 – Asset #1: High credit score, and mortgage scenario example
• 03:00 – Asset #2: High income, advice on increasing it
• 04:10 – Asset #3: High net worth, its importance, and how to calculate it
• 05:05 – Asset #4: High financial IQ, why it’s most crucial and how to develop it
• 08:39 – Diania Merriam’s personal reflections and nuanced take on credit scores and net worth

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Summary Takeaways

• True financial assets are within everyone’s reach and are built on habits, knowledge, and wise decision-making, not just investments.
• Financial security comes from building up all four assets: credit score, income, net worth, and financial IQ.
• Actionable advice: Focus on improving not just your earnings or credit, but your financial literacy and overall net worth for long-term, sustainable wealth.
• Diania’s insight: Don’t obsess about your credit score beyond what’s needed for unlocking good borrowing terms; net worth and practical money management matter more.

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Transcript

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[Christine Lukin]

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[Christine Lukin]

This is Optimal Finance Daily the Four Best Financial Assets by Christine Luken of ChristianLukin.com what are the four best financial assets you should own? Stocks, bonds, real estate, and gold. Those are all amazing assets, but the ones I'm talking about are a little different. These are the assets that anyone at any age with any bank balance can begin to develop. Here they are, in order of importance from least to greatest. The Four Best Financial Assets A High Credit Score why is a high credit score a valuable asset? Your credit score affects your ability to borrow money and the price you pay for borrowing it. If you have a low credit score, your ability to buy other assets like a house, condo, land rental, real estate, or a business is greatly diminished. People with low credit scores are saddled with higher interest rates than those with high credit scores. Lenders view loans to people with lower credit scores as risky, and they charge higher rates to compensate for that risk. So, for example, let's say you're shopping for a $200,000 mortgage financed over 30 years for Simplicity's sake. If you have a stellar credit rating, your interest rate will be 3.92%. If you have an average credit score, Your rate is 4.92%. And if your credit really stinks, your interest rate is going to be 5.92%. You might think, well, what's one or two percentage points more? A lot. A person who has a 4.92% rate will pay $42,572 more in interest than the one who has the 3.9.2% over the life of the loan and the poor guy or gal whose rate is stuck at 5.92% because of their bad credit will pay $87553 more. Now you can see why a high credit score is indeed a valuable asset. If you haven't recently pulled your credit report and checked your credit score, do that now. Take the steps you need to improve your credit score so you're not overpaying to borrow money. 2. A high income why is a high income a valuable asset? Your income is typically your biggest wealth producing tool. If your income is barely enough to cover your daily expenses and your debt payment, it's really hard to save money or build wealth. However, if you have an income above your needs, you're able to fully invest in your 401k or IRA, buy ownership in a business, or purchase other valuable assets. Just because you have a high income doesn't necessarily mean that you're using it wisely. I have plenty of clients who make serious bank but have very little in the way of savings or investments. A high income is only an asset if you don't spend it all. What are some ways to increase your income? Ask for a raise or apply for a different, better paying position within your company. Work some overtime if it's available. Look for a different job with a new company that will pay you better. And be sure to counteroffer because most Companies withhold about 10% from the first offer. Number three a high net Worth why is a high net worth a valuable asset? If you have a high net worth, it means you're able to weather the financial storms of life. First, let's define net worth. Net worth equals your assets minus your liabilities. Add up the value of everything you own, bank balances, retirement and investment accounts, the value of your home, vehicles and other assets and subtract any debt. The answer is your net worth, which you definitely want to be positive. You see, it's possible to have the first two assets, a high credit score and a high income, but not have a high net worth. Which is more valuable? In fact, I've known people with moderate incomes and less than stellar credit scores who have built a high net worth. How? By spending way less than they make and investing wisely. A high net worth is a cushion against the storms of life, such as job loss or illness. If you have assets and money in the bank, you can take care of your expenses while you recover your health or look for another job. This is why it's so valuable. And if you have A high income and great credit. It's much easier to build a high net worth. A High Financial IQ why is a high financial IQ the most valuable asset? Because even if you lose everything, your perfect credit score, your high income, even your high net worth, you have the tools to recover all of them. If the market plummets, the economy crashes, and someone sues you for everything you're worth, there is one thing that no one can ever take from your financial iq. Knowledge is power. But applied knowledge is like a magical superpower. This is why you hear of millionaires who go bankrupt because of a bad business venture, yet return to their millionaire status a few short years later. They have a high financial iq. They understand money, investments, and how to use debt properly. Possessing a high financial IQ will assist you in creating wealth. No matter your starting point. The best thing about this most valuable financial asset is that it costs no money to get it. You can listen to financial podcasts, borrow books from the library like Napoleon Hill's classic Think and grow rich, watch YouTube videos on investing, and read blogs on money management. It will cost a little time and effort, but there's truly no excuse for not growing your financial IQ. You just listened to the post titled the 4 Best Financial Assets by Christine Lukin of ChristianLukin.com Imagine you're a business.

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[Christine Lukin]

I have to say that while I have a high credit score, it's never been something that I've been really focused on. I also think it's important to remember that a credit score isn't really a good indicator of your financial health. It's simply an indicator of your ability to pay back the money you borrow. I used to think that having a high credit score meant that I was doing well financially. But you could be drowning in debt with a fantastic credit score if you make payments on time and have a low utilization of your overall available credit. A much better number to focus on is your net worth. As described in this article, I've been able to maintain a high credit score by putting most of my spending on credit cards and then paying them in full each month. But my reason for doing this isn't really for the credit score, it's more for the convenience and to get the credit card points. When it comes to your credit score, there's a point of diminishing returns. To qualify for the best rewards credit cards, a home mortgage with the lowest interest rates or personal loans with the best terms, you usually need a solid job history and income, a record of responsible credit use, and a FICO score of 720 or above. And that will do it for today. Have a great day and start to your weekend. If you're listening in real time. And I'll be back here over the weekend where your optimal life awaits.