Why Cash Flow Beats Net Worth (And What the World’s First Trillionaire Really Tells Us) – Episode 677

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[00:01] Welcome to the prosperity podcast Prosperity thinkers, welcome to the podcast So there’s been a lot of things that have happened in the financial world Since even the last episode we have the world’s first trillionaire we have a world where People one day believe that they understand and know everything about finances and wealth and then the next day It all changed and then they retract what they said. So kim We’re in the trillionaire times not company people. That’s wild. Is it not? It is in one way and yet it just is what inflation does now arguably elon musk different breed of cat His company’s different breed of dog shall we say And as an example, let me see if I can get these statistics right

[01:01] So when the movie It’s a better life came out I want to say it was in the 30s maybe and the little johnny guy Whatever his name is goes in to the candy store every day and rings the bell and says I want to be a millionaire I want to be a millionaire. I want to be a millionaire If you moved those numbers forward to today That would be worth about 16 million dollars one six with a bunch of zeros 16 million but In today’s world you still have people talking about i’m going to be a millionaire or it’s good because I cross the millionaire line Or whatever and it cracks me up because first of all the numbers are not the same Second of all what your net what your net worth is means nothing Same It’s all about cash flow that matters so much more

[01:52] and third of all Inflation has so and continues to and will ever for the rest of our lives skewed our perception of what quote big numbers are so I haven’t done the math, but if you Work a trillion era back, you know, even 20 years 30 years it really Shouldn’t seem that abnormal. I mean, it’s cool. I’m happy for him The good that he does out in the marketplace is amazing. That’s really what matters, right? And the press kind of glommed on to this trillionaires status, but It doesn’t really matter. What matters is what good is occurring and are there benefits to our society? Because of the work that gets done there and the answer is there’s a lot of good and a lot of benefits So that’s what i’m happy about. Yeah, I dig that

[02:49] you know, it’s it’s uh revealing because you have a large view on finances and how people see it And what I mean is i’ve and i’m basing some of what i’m gonna say off of conversation in the car Because my kids will be like well does that mean that Elon Musk has a trillion dollars. It’s like no he doesn’t And the next is well You know, does he have a ton of cash and one I don’t know what his holdings look like but they’re operating in a world of Getting loans off of their Accounts meaning like what kind of stock portfolio they have or other type of investments In your world, you’re focused on cash flow And you’re taking that element of the loan call it the ability to look at and to be able to loan against

[03:47] a wealth vehicle that is old that not Is not exclusive to trillionaires or billionaires Well, the cash flow part is so interesting because that has been a measuring stick for me for a long time And it’s both cash flow in And cash flow out right because people immediately think about the cash flow in But that cash flow out which most people call saving as a verb the act of saving or putting money away Or you could even say the act of investing but on a consistent basis Is so paramount to people’s success And our clientele is your basic family You know, they might be you could consider them upper middle class if you’d like but i’ll help anybody because It is about cash flow and because people can

[04:39] Make just some of the smallest shifts in their lives And get such big results As it relates to cash flow and then that’s on the upside of the mountain right as you’re climbing up the mountain On the downside of the mountain It is and it could be mountains plural Is again all about cash flow and again, we have this hang up with net worth and when people truly look at it and Say, okay. I need a certain amount per month it’s really amazing what Lives could be lived at various dollar figures per month That people would be so happy with But somehow society or the media has gotten them a little confused or Focus on the wrong thing like the net worth number, right? And so it’s just a joy to be able to help people see on the front end going up that mountain

[05:44] Climbing it on a daily basis The good that cash flow can do and then same on the return and it’s just a shift in perspective and so sometimes literally i’ll do a meeting with somebody And it’s like they’ve done a 180 in their brain and consequently In their money, which means in their daily lives by shifting that focus to cash flow and It is age old right? You mentioned one of the products that we use which is the whole life policy That requires cash flow going out of your normal day-to-day operation into Something that impacts your day-to-day operation. Whereas for example retirement monies Dollars are going out of your day-to-day operation and then they’re going into a black box That does not get to impact your day-to-day operation

[06:37] for many years And then there are other families that don’t want to look at the life insurance space at all for whatever reason they don’t Like the idea of life insurance. They don’t like the guarantees. They don’t like the fact that it’s been around a couple hundred years And so we have a structure that we provide that helps them with cash flow again money coming in and money going out Sometimes the two work together and sometimes they don’t but it’s a joy to be able to help people and meet people Where they are at as it relates to cash flow. Absolutely so One, I don’t think Unfortunately, we are going to single-handedly change the world From cash flow perspective and focused versus net worth

[07:25] I hope that we’re making a difference and I think we are just based off of the material that you’ve mentioned on the podcast and from Families that are writing in and going through, you know Books like the prosperity pets books or people that are learning and constantly growing and it’s not perfect meaning every family is different So the follow-up question is this getting someone to shift from Total net worth focus to cash flow focus Is a difficult shift What’s the first bite? That we can give them that will help Well, I think it’s the middle number which is the rate of return so You stated it. Well, there’s a net worth focus and we would like them to jump clear over to a cash flow focus But there’s a middle space that people are often also very focused on and it’s rate of return

[08:26] And it comes from comments like dave ramsey saying oh you can get 12 in the stock market as if anybody could just Do that on any given day? regularly And then it also comes from a lot of other financial commentators, which will make comments such as You get an average of fill in the blank seven eight nine Whatever the interest rate is the rate of return is that they are parroting And as we have proven numerically and talked about conceptually many times Average is not actual so average as we all know is a mathematical exercise and yet it doesn’t really work that way with money because Your dollars are going through those various. Let’s say you’re going to add up three years and then divide by three to get your average

[09:18] Well, your dollars are actually going through the three years the first year and then the second year and then the third year and so because of that Your average could be 25 percent and your actual could actually be zero percent And so I think if we help people understand that middle ground Then their Eyes are on high alert Then they’re open-minded and they’re listening and they’re saying Excuse me Wait a minute if what I thought was true the idea of averages, for example Is not true and they just numerically proved it Maybe there’s something else that I should be looking at And then i’ll layer this in as well and that goes back to control because we cannot control the rate of return our dollars get

[10:11] In most cases, we also cannot really control what our net worth is Yet we can absolutely control our cash flow on a monthly basis We can You know, this is the conversation I don’t even know how many we’ve had on the podcast But it’s one that we have to have over and over for the Conversations that we have like this it can Go down to a real estate conversation. It can be an investment conversation It could be a variety of things owning a business or having a side hustle or whatever it would be But it has to start somewhere Kim for the books That you often recommend What would be the one? That you would say to our listeners hey grab a copy of this or listen to it And it’ll bring you up to speed

[11:03] and if you are already cash flow focused This will be the book that will maybe add a multiple to it Well on the mountain upside my busting budgeting lies book Is really the best one to get a handle on the cash flow control that all families want to have as they’re Climbing the mountain And then on the mountain down side It’s the little live your life insurance that I don’t I do have it handy That’s been around for so so long and it’s part two So live your life insurance part two, which is all of 20 pages Has some really specific ideas on the down the mountain side of cash flow for families And so those are the two things that I would encourage people to focus on And what’s interesting also about the down the mountain side is you know, let’s say for most people that starts at age 70

[12:08] Well, there are things that you can do in your 30s and 40s and even 50s To have a major impact on your dollars When you’re in your 70s and 80s and 90s and heading down that mountain And so it’s super helpful for even a young family To get into the live your life insurance book and learn a little bit about That second half if you will because frankly, it’s a lot easier to make changes when you’re in your 40s and 50s And waiting until you’re in your 70s and not that it can’t be done when you’re in your 70s But it’s a lot easier In your 40s and 50s. Yeah, so those are the two things I direct people to I love it We’ll make sure that we have those included for all of our listeners. You’ll notice We did not talk down about the trillionaire world. We think prosperously

[13:06] We talked about the thing that actually mattered And so then we don’t expect mainstream News and media to do that We’re focusing on the things that actually matter long term and create prosperity For all of you listeners Thank you for subscribing and being a part of the podcast if you’re listening if you’re watching If you’re just grabbing a clip here and there if you’re only seeing this on socials Make sure you hit the follow button so that you can get the full episode And then if you want to dive deeper as we mentioned a couple of books and valuable resources Thank you for listening to the prosperity podcast to take control of your money and have it work for you Visit prosperity thinkers.com