Summary:
Ask any millionaire and they’ll tell you: cash flow is king. Establishing a positive cash flow each and every month is critical to attaining security and financial freedom, so make this your mantra.
Is your current income enough? If it’s not, what are you going to do about it?
Two essential elements are required to begin creating a positive cash flow: limiting your expenditures and the creation additional income streams.
First, start with getting your expenses under control. Find out where your money is going each week and month, and then start looking for ways to cut your expenses. It’s about getting real with your money and putting your financial house in order. It may seem difficult at first, but once you start to see the positive effect this has on your cash flow each and every month, you will be inspired to look for even more ways to cut your expenses. It’s really just about starting somewhere, right now.
To get control of your expenses and begin to optimize your cash flow, it is crucial that you pay off the balance of your credit cards each and every month, so that you’re not running a balance. Don’t allow yourself to become a slave to interest payments. As you are cutting expenses and begin to see an increase in your cash flow, you’ll want to build an emergency fund; a minimum of 6 months worth of income or expenses set aside.
The second element of building a positive cash flow is the creation of additional income streams, and there are many potential ways you can do this, starting today. Ask yourself how you can use your talents to either find a second job or perhaps start a business. Start generating ideas. It may be necessary to acquire further skills, so make this a part of your plan.
As your cash flow increases, be sure that you are not spending it. Just because you have the extra income doesn’t mean that you should spend it. Instead, start finding ways to use this money and put it to work for you through solid foundational investments that can provide you with passive streams of income. As you are able to build various streams of income over time, your will be on your way to building your underlying net worth, which is the bedrock foundation of your financial security and freedom.
It all starts with these essential first steps, and builds over time. Start creating your positive cash flow today so you can build your net worth over time and be well on your way to living rich in the next five to seven years.
Transcript:
Ask any millionaire and they will tell you, cash flow really is king. This is your income, the amount of money that you have coming in each and every month. Let me first ask you: Is your current income enough? Is what you have coming in each month enough money? If it’s not, what are you going to do about it? What are you doing about it today to make a difference and change the situation?
One of the things about cash flow is that with enough of it, you can live like a millionaire, although you may not actually be one. Let me explain. Cash flow gives you a lot of options. You can spend, spend and keep on spending. To the neighbors it may look as though you’ve got lots of money. You may have a great car, a nice house, but what if your assets don’t match the amount of money that you’re spending?
Now, when I first got my taste of excess cash flow, it was not only a relief, it was really quite exciting. Having more money than you can spend in a month is a concept that many people don’t even know or understand. Yet anybody can have an excess cash flow in a month. Anybody can create excess cash flow, even if his or her net worth is not substantial or established.
Back when I was selling real estate, I also started a second business. I started working on this business part-time as well as working full-time at my real estate business. I was able to turn this part-time enterprise into a multimillion-dollar business. Before too long, I actually started earning as much in a month as many executives would earn in an entire year. Now of course, when you have that type of cash flow, things change.
Getting Started
To begin with, don’t think about needing to have thousands of dollars to put away each month. It’s really just about starting somewhere. Right now! You need to ask yourself, how can I get at least $100 a month to put away, or if you’ve already got a bit of excess cash flow, ask how are you making that money work for you?
It’s about getting real with your money and putting your financial house in order. Initially this might mean cutting some expenses and getting your head above water just so that you’re not spending more than you’re making. It is absolutely critical when you’re trying to get ahead that you spend less than you are making. In fact, what we want to do is get to the point where we’re actually using our money, and not just our labor, to make ourselves more money. This is going to mean different things to different people.
Getting a Handle on Your Finances
First, it’s important to analyze exactly what it is that you’re spending. Understand where your money is going each week and each month, and get this under control. Understand, as I’ve said, that you may need to cut expenses in certain areas and it may seem difficult at first, but it is doable. Once you start to see the positive effect this has on your cash flow each and every month, you will be inspired to look for even more ways to cut your expenses. Virtually everybody has a way that they can cut their expenses right now, today. In fact, there will likely be several ways you can come up with to cut your expenses. Look for as many ways as possible to cut your expenses.
Build and Emergency Fund
As you’re cutting and you start to have a little bit of excess cash flow, you will want to build an emergency fund. You’ll need a minimum of six months worth of income or expenses to set aside, and keep this money in reserve as an emergency fund. Now, this isn’t an emergency fund to go on a vacation with. This is literally only for emergency use, in the event that you lose your job or if some other catastrophic event takes place. That way, you are prepared for it from a financial standpoint.
Pay Off Debt
To get a handle on your expenses and optimize your cash flow, it is also crucial that you pay off the entire balance of your credit cards each and every month. Credit cards are okay to use, but only if they are used wisely. In fact, perhaps you should consider having only one credit card. Be sure that you are paying off all of the money that you spend each and every month. We want to pay off our credit cards 100% entirely so that we’re not running a balance, because credit card interest rates, as you probably already know, are horrendous. Don’t allow yourself to become a slave to interest payments.
So this is one of the places that you can really start to work on, so you can begin to increase your cash flow. Now, if you’re really in trouble with the credit card companies and are falling behind in your payments, one of the things you can do is contact the credit card companies and negotiate with them. Talk to them. Tell them that you’re in the process of trying to get your financial house in order and that you don’t have the ability to pay them all of what you owe right now. Try to negotiate a reduced interest rate or, even better, no interest rate. Tell them you will cancel the card and, if possible, get them to negate all of the interest that has accrued and compounded to this point. Now, that’s a strategy if you’re really in trouble with the credit card company.
As you begin to get your spending under control, and as you get a handle on your credit card debt, eliminating it as soon as possible, you are going to start to look for new sources of extra cash flow or extra income. It’s important to remember that when you get this newfound income, this isn’t to spend. This is to save and get working for you.
Winning the Lottery is Not a Retirement Strategy
Now, here’s an interesting statistic: There was a survey done by the Bank of Montreal that said 30% of the people in Canada were expecting and counting on a lottery to fund their retirement. I expect this statistic of 30% will likely be similar in the U.S. as well. Don’t let yourself be part of that statistic! Believe me, counting on a lottery for your retirement or for your financial future is not a strategic plan. You need to take charge and be in control of your finances and your future. It’s the same in all aspects of your life. You’re the one in charge. You’re the one in command. You make the decisions, so decide to take charge of your fiscal self as well as your physical self and take control over all aspects of your life.
Creating Additional Income Streams
So what can you do today to start increasing your cash flow? You need to get your spending under control and then look for ways to increase your income. Now, based on your current talents, there are probably a number of things you could start doing today that will increase your cash flow.
Start by asking yourself some questions: Should I start a low or no cost startup business? How can I start to use the talents that I currently have? Should I consider working with other people to figure this out? You must come up with how you’re going to create additional cash flow, no matter how you decide to do it, if you’re going to get ahead and become financially free. Your cash flow must to be greater than your expenses. You need to be saving money, pulling in extra cash that you will then start putting to work for you. Creating this additional cash flow is really critical to creating wealth.
Now, I use a variety of cash flow methods myself. Two of the things that I do for my personal cash flow is to trade currencies and options. While this isn’t necessarily something that everybody should do, it’s just one of the things that I personally do.
There are some tough realities associated with trading however. First off, there is the requirement of some capital. It doesn’t have to be a lot of capital. It depends on how much cash flow you’re after, but that said, you will also require a degree of skill, and believe me, knowing how to trade options or currencies doesn’t come overnight. That said there are services you can subscribe to that will give you currency trade signals. There are option trade signals, stock trade signals and others, but again, they all require some capital. So if you’re not in that position yet today, that’s okay. Just ask yourself, what is it that you’re going to need to learn in order to create the cash flow that you require? What skills will you need to learn?
Pursue Your Passions
Is there something that you’re passionate about that you do well, and you know you can make income from right now? Something that you would enjoy doing? I strongly encourage that when you start to pursue extra forms of cash flow, that you do something you actually enjoy. It may be that initially you have to take a second job or an extra job that you’re not really excited about and that’s okay, as long as you know you’re working toward something that you will enjoy later and that will help you create more cash flow. With greater cash flow you can then start to put your money to work for you. Maybe it’s something that you can actually turn into a substantial amount of cash flow that will really set you on the road to financial freedom. If you need to get a skill to do this, make getting that skill a part of your plan.
Cash flow is really such an important subject because it encompasses so many aspects of our lives. We’d like to think, “Oh, I’m not really money-focused.” Well, the problem is when you don’t have cash flow, money all of a sudden becomes a big focus in your life. I know this is true from first hand experience. When I was going through my bankruptcy and had no income, I was constantly focused on money, believe me. Money became an absolute focus because putting food on the table was the next thing I was worried about.
Utilize Your Skills and Talents
There are many ways in which you can increase your cash flow. There are probably dozens of things you could start doing today that you haven’t even thought of yet, a skill or something of value you have that you can turn into extra income.
For example, if you’re a teacher, you can become a tutor part-time or maybe you want to become a freelance writer. You can do some writing on the side or perhaps editing and copy writing. You can start an import or export business. I used to own a vending machine company. These are just examples of some of the things that you can do, and I could go on and on, but there are literally hundreds if not thousands of ideas out there. There are so many ways that you can actually start to earn money and, yes, some of them will require some capital, but many of them don’t need to cost you a thing to get started. o you can start today to create that extra cash flow.
Put Your Extra Cash Flow To Use
It’s really important when you start generating this extra cash flow, whether it’s from a second job or a side business, that you don’t just start spending it. Just because we have extra cash flow, we don’t want to start living like a millionaire. You want to begin to put this extra cash flow to use making you more money.
Learn how to put your money to work for you. That’s how you’re going to create security, by having your money working for you, building up your net worth. Your net worth is your security. Your cash flow is your security. You want that cash flow to be stable and secure, being created through vehicles that are absolute and foundational. Again, there are many ways to do this, whether it’s investing in real estate, different stock strategies, or a variety of other income producing avenues that are going to provide you with this security.
Once that secondary income starts to flow, and that extra cash flow starts working for you through other foundational avenues of investment, along with that cash flow and security comes freedom. It’s about creating and maintaining that passive cash flow over time and continuing to build it up through various avenues. Once you have created a passive cash flow that you can literally walk away from, one that literally comes in each and every month whether you do any work or not, that’s now what gives you freedom. As your cash flow grows and as your net worth grows, your freedom will grow too.
You Can Do This!
I know that you can do this. I’ve done it. I’ve seen literally dozens of other people do this as well. Many of the people I’ve worked with have gone on to create absolutely huge financial success for themselves and I know that anybody starting from virtually anywhere, even from below zero like I was, can be financially free in five to seven years.
Now, I don’t know if five or seven years sounds like a lot to you, but think about this: if you don’t set a plan right now to get your spending under control and achieve extra cash flow, where are you going to be five years from now? Well, set that plan in motion right now, because cash flow is king.
Start generating ideas and figure out how you’re going to get that extra cash flow. Acquire whatever skills may be necessary along the way, and learn to be fiscally disciplined, so that you keep more than you spend each and every month. That’s how you start, and that is what’s going to set you on the road to financial freedom.
Like I’ve said, anybody can do this. I’ve done it and so have many of the people that I’ve worked with. I know that you can do it too. Just remember, cash flow is king; make this your mantra. Get your spending under control and start finding ways to create additional streams of income. You can and must do this to get on the road to financial freedom. You can do this, and be absolutely financially free in the next five to seven years. So until next time, live rich.
