Say that the money you earn was water and it flowed from the mountains on its way to the sea. There is the mountain water which is either a roaring river, a stream or a trickle and it stops momentarily at a lake, pond, or puddle before turning into the sea bound roaring river, stream or trickle again. Now the flowing mountain water is your income, the lake, pond or puddle the money you keep and the sea bound water are your expenses. Your goal is to increase the mountain water, expand the lake and stem the sea bound water. All right so this is crap analogy but you get the picture. Talking about money can be very boring so we need a bit of a warm up period.
The point is, what’s more important than how much money you earn is how much money you keep! The world is determined to tempt you into a position of balancing the money you earn and the money you spend. Its a cruel way of keeping us all in a position of financial imprisonment. For example, as your income increasing your ability to purchase increases and there is always an advertised offer masterfully crafted to satisfy the interests of your new found income and status. The majority of us gain skills and wisdom sufficient enough to increase the mountain water, i.e to increase our income. The irony is that as we do we are immediately faced with a whole new set of expense propositions. There are simply many more people and vast resources committed to the goal of making us spend our money. How many people or resources do you know out there helping you to keep and expand the money you have earned? Probably not many.
The end result is that the earnings to spending ratio stays the same regardless of how much money you earn because your mind tells you, hey as long as I don’t spend more than I earn I should be ok. So I can afford the big screen tv, the boat, the use it once a year batch, and the list goes on and on. Ever aimed to arrive somewhere by a certain time, yep your have got it you probably arrived right on time or later than the target time, not early. Its the same with money, when you aim to balance out income and spending we more often than not spend more than we should have.
The reality is that as you get older the scale of this little financial game is increasing, yes the stakes are getting higher buddy. The buy in is going up, the pay back is greater and so is the loss. The house costs, the kids have to be fed and so on. There is nothing left right? It gets harder and harder to break the cycle.
You need to take control before you are locked into the big little life of a balanced financial ratio because this means you are always on the brink of imminent financial ruin. You do not want a balanced financial ratio where income equals costs.
You have been fooled into believing that you should settle for financial survival. Where this whole things collapses is the moment the income pauses or stops. A shuddering thought right. How long could you last? Now the more money you keep the longer you can live in your current lifestyle without the income stream. Perhaps if you are brilliant this would last forever. This is the place where you need to be in your life.
Once you have determined a way to pay yourself first and keep some of the money you earn you need to either store it or transform it. Remember in a previous article that I talked about how money isn’t real? Well this is where it gets really interesting because you can turn the concept of money into something else, something completely different. Because you have kept the money for you, its yours! You control it, you can do whatever you want with it. It is not intended for rent, the mortgage, food whatever. Its yours to put it to work. Twist it, transform it, give it away, turn it into businesses, property, or shares. Transform money into whatever has measurable value, create an ability to produce more value, and make sure you have enough control to transform it back into money again should you need it.
Most of all live well and live now. 🙂