Prioritize Cash Flow
Cash Flow First
“Financial Freedom is measured in hours, not dollars.
Hours are earned back with each dollar you can get from your assets rather than your time”
-Aaron David
Why do we invest for positive cash flow before accumulation and appreciation? Simple. Because only spendable income from your assets will pay your bills for you and give you back your time. Asset appreciation can’t do the same.
You can never retire or buy groceries with your high net worth – unless your equity produces cash flow.
- We find ways to increase cash flow
- Positive cash flow = savings
- Savings are invested wisely
- Wise investments produce more positive cash flow (income)
- Investment income gives you back a corresponding amount of your time
- The cycle continues
Unfortunately, most professionals will advise you in the “Accumulation Model” which is often in their best interest due to the way they are compensated, but rarely in your best interest. Accumulation is de-emphasized in the Cash Flow Model because it comes later.
There are three big problems with prioritizing the accumulation approach.
- Cash flows away from you rather than to you. It’s expensive!
- You’ll often reduce liquidity and give up control of your capital for no tangible benefit. It’s masochistic!
- It encourages speculation over profit and financial products over winning processes. It’s reckless!