Once upon a time cash was king, and then on one hot day in August 1971 cash was dethroned by “cash flow.” A new regime was in power. Here’s what I mean…
There was a time when working for money, saving, retiring, and living off the interest of your savings account was possible. But today, money is no longer money. Working harder for paper money without converting it into economic assets is like diving without an oxygen tank – you might be fine for a while, but eventually you’re going to run out of air.
In this new economy, it’s important to understand that, worldwide, governments reward producers who create economy and punish consumers who participate in it. It’s not fair, but without producers there could be no consumers and economy would cease to exist. Then where would we be?
Currencies come and go. They collapse and are replaced – it’s happened in this country twice, and many more times throughout history. What doesn’t collapse is the economy behind the currency. If you learn to invest in assets that produce cash flow regardless of the current currency, you ensure your livelihood in good and bad economies.
There are countless assets that are essential to the economy. Find the ones you like and invest in them.
How do you sniff out the essential assets?
Look at what people spend money on. A few of the more obvious expenses are food, shelter, clothing, communication, fuel, transportation, and education.
If you want to be financially free, you must also understand the mindset of the different economic classes.
Distinguishing where people put their focus will help you decide where you want to put yours.
- Poor people focus only on expenses; living paycheck to paycheck – even if those paychecks are sizable. They must always work for money.
- The middle class focuses on liabilities, buying more and sinking deeper into debt. If they invest, they usually do so with a financial planner in an, ahem, diversified portfolio of stocks, bonds, and mutual funds. If they want to keep afloat, they too must continue to work for money.
- The rich focus on acquiring assets and let their assets pay for their liabilities and expenses. Assets continue to produce income whether they work or not. They work because they want to.
The raw beaten truth is, if you do not put your money into cash flow producing assets you will probably be working hard for money all your life.
If you make the decision to invest in your financial education, know that it might be painful at first. The learning curve is steep and in the beginning and it’s a lot of work without much reward, but don’t underestimate the power of compounding education. Knowledge and experience compound in the same fashion money does. Applying your education in real life unleashes the epic power of what you’ve learned. In time you’ll soar, and little effort returns a great yield. You’ve just got to stick it out for a short time and as I’ve said many times: start small; learn big.
When you find your talents, develop your skills and apply them both generously, you will significantly mitigate your risk and the reward you’ll reap is astonishing. You’ll kick yourself for not getting started sooner.
My life almost immediately turned around and I started creating real wealth when I shifted my focus from “making money” to “creating cash flow.” That’s where it began for me, and that’s where it can begin for you. If you’re at a loss of how to get started, try here.