Financial Freedom Friday – Predictable Income


Hey everyone! Welcome back to Financial
Freedom Friday where we discuss tips and strategies to help you achieve financial
freedom. My name is Nate Scott, it’s great to be back with you. Today we’re gonna
talk about a pretty fun topic, at least for me, and I’ve talked about before so
if you’ve been around us for any period of time you may have heard me talk about
this before. But we’re gonna talk about the difference between accumulating
money or creating passive income, or cash flow. And really why cash flow needs to
be your main focus. So cash flow is really the most
important thing to people financially. I mean, we know if we had a good month or a
bad month depending on whether our income was greater than our expenses. It
really didn’t matter how much money we had sitting around in various accounts,
we just wanted our income to be greater than our expenses. But most of the world
has been infatuated with this idea of accumulating money or this nest egg
concept or their main goal is to just build a big pile of money. And whether or
not that is good at creating passive income or not that’s up in the air. So
most of the time what most people have is, they’re focused on 401(k)s, IRAs, you
know, the conventional things. And so they’re focused on mainly stock market
assets, that’s mainly what people are using their 401(k)s and IRAs to invest in,
mutual funds and stocks and things like that. And so they go out and we’re
piling money with the hopes of having a big pile of money at some point
that we can take income from, or “income” from, which we’ll get to. But in order to
really have income coming from a stock market asset, or like an IRA, 401(k), it’s not
actually producing income most of the time. What we mean by producing income is
you got to start selling your assets to produce income. That’s normally what we
mean by that. So we get to the point where it’s time to retire and
instead of just getting a consistent predictable check from our assets, really
what we have to start doing is selling our assets. It’s always better to have
your assets produce income and try to stay away from having to sell assets to
survive. Selling assets to survive can be a scary place. I mean, just ask the people
in the crisis in 2008-2009 who were just retiring or had been retired
and they have all their money in these 401(k)s and IRAs and it’s really
invested in the market and suddenly the risk, I guess, that I’m trying to focus on is that when you sell assets to
produce income, the risk is we don’t know what they’re gonna sell for. So back in 08-09 as I was talking about, they were starting to sell their assets, they
thought they could sell them for twice what they were actually able to sell them for.
Because they lost half their value in the market crash. So the risk is if we
have to sell assets to produce income, we have no idea what we’re gonna be able to
sell them for. And so our income can vary wildly because we have no idea what
amount of money they’re gonna be worth at that time. What we can actually
sell them for. So instead of trying to build this accumulation mindset, I
like to focus on trying to find income, predictable cash flow, that comes each
and every month that you don’t have to sell assets to get. And some of the best
examples of that are passive income real estate, where you buy
rental properties and there’s predictability to that. You don’t have to
sell an asset to produce income. Same thing for even whole life insurance, you
know, it’s predictably gonna grow each and every year and you can take income
from it without having to sell anything, worrying about what the price is going
to be when you sell it. Or even investing in small businesses that you maybe
understand pretty well. Those are great sources of passive income and those will
allow you to get to that financial freedom point quicker because when
you’re accumulating, you never quite know when you’ve accumulated enough. However,
whenever you’ve produced income it’s very easy to determine when you
have enough income to survive if it’s coming in passively. So that’s what we
encourage you to do is focus on other areas instead of just conventionally
just building a big pile of money. Focus on income. It will help you achieve it so
much quicker. And remember if you don’t build your financial freedom, nobody’s
gonna do it for you. So let’s get to work. We’ll see you next
Friday.

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