What Is Positive Cashflow?
Very simply, positive cashflow is money left over from your paycheck every month after paying rent, utilities, medical bills, food, and all kinds of expenses.
If your paycheck every month is greater than your expenses then you have positive cashflow!
Of course, your goal is to increase that cashflow, especially if you don’t have one now.
Do You Have Positive Cashflow?
Over half of all Americans have less than $500 in the bank. That means it only takes one visit to the emergency room, an unexpected car repair, or suddenly losing their jobs to send them into financial ruin.
Did you know that 60% of all Millennials do not even have a 401(k) retirement savings plan, believing investing in the stock market is nothing more than gambling? Talk about a lack of understanding in how the markets actually work!
Even more bleak, half of all Americans have less than $5000 saved in the bank by the time they retire. Other stats are slightly more optimistic and put this number at $30,000. Still, that’s hardly enough to retire in comfort. That’s why some people aren’t even retiring but staying in the workforce.
Why You Want Positive Cashflow
Having a ready source of money allows you to…
- Build a cash reserve so that you don’t ever worry again about losing your job.
- Enables you to invest so that you can stop working sooner than later.
- Provides a protective financial cushion from life’s unexpected surprises.
- Gives you the power to do what you want most, like chase after your own dreams or go on vacation.
- Finally, because money serves you.
More on that final bullet about chasing after your own dreams. A lot of people like to say, “I want a dream job,” without realizing what they are really saying. It’s this: I’m helping make someone else’s dreams come true. After all, how is any job a dream job if when you stop working that cashflow stops?
Set up your life so that you’re still making money, even when you’re not working. You do this through investments, stocks, real estate, or even running your own business.
Go to Hell Money
Use a positive cashflow to build up your “Go to Hell” money. This is sitting in your bank account, not tied up in any investments or financial venture, that is ready to go at a moment’s notice, ready to serve you. Think of it as a cash reserve. It provides you a peace of mind, because you know that if anything happens you’re covered financially.
It gives you greater leverage and more confidence. How so? Let’s say your manager wants you to come in on a Saturday…at 6 am. All they need for you to do is run something that could easily take you all of 10 minutes right now to show someone else who is coming in tomorrow how to do. You really don’t want to spend your Saturday, unpaid in this way. But they are insisting. So, what do you do?
With Go to Hell Money, you can say “No” and not worry about the repercussions! Offer to train someone else who is coming in that morning so that you can have your Saturday back. Or, simply say, “No.”
You have to learn how to set your own limits in the workforce. I’ve seen too many people get burnt out, especially in tech, all because they don’t know how to say “No” or are too afraid to. Having Go to Hell Money gives you this freedom.
Managers are supposed to manage people and make sure the work is covered. I used to ask my manager if I can take time off to go to the doctor’s office. Then, I realized there is something fundamentally wrong with having to ask another grown human being if you can have time off.
Nowadays, I simply state that I’ll be gone, with the implicit part being, “You figure out if there’s enough people to do the work and work out a compromise with me if you really can’t afford to have me out of the office for a few hours.”
In Closing
You can see why having a positive cashflow is so important. It frees you up from the financial worries in life so that you get to spend your time however you like. Time is the most precious and non-renewable of all commodities. With a positive cashflow, you get to decide what to do with your time now, whether that means spending more time with your family, chasing after your dreams, or going on vacation whenever you like.