Understanding cash flow doesn’t seem immediately important for many people. After all, isn’t it just some accounting thing? Well, not quite. It turns out that cash flow has implications for anyone who manages a business or their own personal finances. Knowing how much money is going out relative to how much is going in is essential. Fortunately, that’s where this post can help. We look at the cash flow mindset, what it means, and why it may matter more than a large salary.
The Cash Flow Mindset
Financially secure people often adopt a cash flow mindset. Interestingly, these individuals aren’t too concerned with their careers. Instead, they look at ways to keep the money flowing and manage it a bit like a business. But what does that mean in practice?
They Go On The Offense And Defense
One of the things they do is play offense and defense. Offense includes things like starting side hustles and looking for breakthrough opportunities, while defense involves reducing taxes and other money sinks. As such, they know how to be aggressive, but they also know how to protect themselves. They play both ends of the stick.
They Monitor
Another thing you find these people doing is monitoring their setups and then adjusting them. They don’t believe they can set and forget the game. They manage their cash flow meticulously, asking questions whenever money goes out.
They Focus On Assets
Finally, many of these people focus on income-generating assets. They aren’t as interested in going to work as the ordinary person, but rather would find something that could generate cash for them, preferably with minimal oversight.
Why Cash Flow Works Better Than Salary
Cash flow works better than salaried income overall because it has the potential to give you freedom. You don’t want to spend your life working for the money you need to live. Instead, you want to use smart systems to automate the process of making money so you can focus on the projects that actually matter to you.
For example, you could use a payment processor to take care of all the transactions in the background. Alternatively, you hire managers to deal with your companies for you.
Ultimately, what matters is the amount of money coming in versus going out. If you can keep this relationship positive throughout the year, you will see your wealth grow, and you may not have to work hard to get it.
How To Think Like Someone Successful
So, how can you think like someone successful who understands cash flow? Your top priority is to audit your cash flow and know what’s coming. You should look at how much money you can make and where it is coming from. For example, look for side hustles and passive income sources. See if these can generate the cash flow you need. Alternatively, look for investments that can grow your cash. Where possible, cut the dead weight. Get rid of anything that isn’t adding value to your finances or business ventures.
