Life is a cash flow process composed of cash flow events.
We most often think of our personal finances in terms of income and expenses, or perhaps wealth and debt, but it really all boils down to cash flow.
Cash flow is a business term that looks beyond monthly income and expenses to consider a longer-term view. Since business expenses are not simply rent and utilities, but include many significant periodic cash demands like replenishing inventory or paying taxes, a business must plan for their future cash needs ahead of time.
We have similar challenges in our personal finances, because it’s our failure to plan for significant, periodic expenses that get us into financial trouble. If an unplanned-for cash flow need arises, and we don’t have the cash available, what do we do?
We use debt to cover the expense.
Think about this in cash flow terms
When you use debt, like credit cards and car loans, you begin committing part of today’s cash flow to pay for yesterday’s unprepared-for cash flow events.
Today’s cash is flowing into yesterday.
How can you ever expect to slow down or stop working in the future, if the money that should be building what we call Job-Optional Cash Flow for your future is being wasted on paying for yesterday?
Unless you make LOTS of money, it’s impossible, which is why the Employee Benefits Research Institute reports that 92% of Americans are not on a financial trajectory to ever stop working and live anything like their working lifestyle.
Cash vs Wealth
You and I understand that personal debt is bad. We recognize it every month when we make the payments. But what’s our understanding of wealth?
Most people aspire to be “wealthy,” but what does that mean?
When you go to the supermarket and fill a cart with groceries, they don’t ask you for wealth at the checkout counter. They ask for cash. Now, that cash might be actual greenbacks, or a debit card, or a check, or even a credit card that you pay in full each month with cash.
However you do it, it takes cash to eat.
Then you take your groceries out to your car and swing into the nearby gas station. When the tank is full, the meter doesn’t ask you for “5 Wealths.” It says “$29.72”. It demands cash!
Life takes cash, so you need to have cash available to flow into the expenses of staying alive.
It makes sense today
Using today’s cash flow to cover today’s cost of living is clear and obvious. What’s less obvious is that your car loan payment or Visa payment is NOT an expense of living today.
It’s today’s cash flowing into yesterday.
How we’re going to live tomorrow, a year from now, 10 years from now, in our 70s and beyond, is even less obvious. The future is nebulous, and how we’re going to pay for staying alive in the future is even hazier.
So…we don’t think about it. We plug our ears, shout “La la la la la,” and deceive ourselves that it will all just work out somehow.
But it won’t.
It will take cash flow to live in the future just like it does today.
And, if you continue wasting the portion of today’s cash flow, that should be going into tomorrow, on yesterday’s consumption – in the future you won’t be able to fill your gas tank to drive to the supermarket you won’t be able to afford to shop at…unless you continue working until you die.
There is a way to fix this
It’s called the SMART Wealth System, and you can learn about it by CLICKING HERE.
It will show you how to maximize your available cash today, accelerate paying off the cash-draining debts of yesterday, and how to dependably build an ever-growing pile of cash available to make working at a job in the future OPTIONAL.
