“Don’t cling to a mistake just because you spent a long time making it”- Unknown
This week I was going to write about setting goals, and getting the brain in the right place to accomplish those goals in 2016, you know, the usual stuff for the end of the year, but I read an article on Biggerpockets.com yesterday that really hit a nerve with me, because the author was communicating that the practice of saving money would lead to “stability”
So, instead of goals and mindset, I am going to speak about how a majority of our parents have set us up to be in the rat race. If you don’t know what I’m referring to when I say rat race, it’s the go to school, get good grades, so you can get a good job with benefits, save your money, buy a house, then retire, and live with less money than you made at the job. If that sounds like the dream life, then you should probably stop reading, because you will only get upset about what I’m going to say.
The advice our parents gave us was wrong
Your worth is not based on the job you have, the universities you have attended, or the size of your savings account. I feel that our worth is based on the quality of life that we live, and how much we are able to help those around us achieve more.
To have the good life, and be able to help those around us, tools are required. Those tools are the proper mindset, skills, and cash flow.
In the article I mentioned earlier the author wrote of how most individuals do not have $1,000 in their bank account, and then went on to break down how to get on the path to saving money, and that by doing this somehow “Stability’ would be achieved. If you are interested, check out the article here. I agree that the ability to manage money, and save are fundamental to success, but saving money in an account, and expecting to have "stability" is a fantasy.
What is your definition of stability? Take a minute to get an answer in your head.
Let me share mine, stability is having money deposited in our bank account every month that does not depend on the punching a clock at a job. There are many ways to do this, seek out more knowledge on what would be a good fit for you. Real estate is what works for my situation.
We lose our job, and the current job market is tough, making it hard to secure unemployment for at least 6 months, but we have taken the time to build up enough cash flow that covers our basic needs resulting in no significant change to our day to day life, allowing us to search for a job without any added stress.
We worked for 5 years straight. We were good at managing our money, we didn’t get sick, or have any emergencies, everything went perfect and $10,000 was saved. We are doing so great that we decide to take a vacation to celebrate, and BAM! We break both legs, and because I like to be extreme, we break both of our arms, and the dog gets sick. In an instant, we are out of work, and burning through cash fast.
According to our parents (and some authors) we were supposed to be OK if we saved our pennies, and put our money in an account for a “rainy day” but as you can see from the example above, a medical emergency, combined with some form of emergency, $10,000 will vanish into thin air very quick, and then what will you do?
Take a look at the graph below. It shows for the last 100 years 90% of wage earners were not even able to come close to saving 10% of their income. Make a choice now to not become a statistic.
In closing, the best thing we can do in 2016 is improve our health, wealth, love, and happiness by getting our mindset in the right place, acquiring new skills, while improving the ones we already have, and saving money to purchase steady streams of cash flow that do not depend on punching the clock, so that we can fuel future improvement, and not letting money languish in an account, letting the bank get all the value from it.
Have you had an unexpected life event that could have been avoided with a monthly cash flow in place? Share it in the comments below!