How to Master Your Cash Flow

Money does NOT buy happiness, we all know that, but it sure makes life a little easier and allows us to be the person we were originally put on this earth to be; a brilliant book writer, a wonderful father, a professional volunteer, etc. Whatever that “dream” is for you, it is attainable, and we just need to get to a point where money does not consume our worries on a daily basis.

Okay Mr. Positive, how does that happen? It doesn’t happen overnight, but, by getting into the frame of mind that it is possible and eventually KNOW that it will happen, we can be in a much different financial position than we are now.

I am talking about building wealth by creating a residual cash flow. Meaning, we need to make our money work FOR us, not against us. Money has the intrinsic value of being able to multiply itself if we put it in the right position, even if we start with $1. We need to master our cash flow!

I grew up in West St. Paul, Minnesota in a lower income family and 99% of the fights that occurred within my family were about money and the lack of the asset. I vowed to myself that I would not put my children through that and eventually found the vehicle to take me there. Once the vehicle was built, I started using the residuals from the first business to generate more residuals in a second and third business. Residual income is based off of leverage meaning that you are not doing all the work, but are leveraging people and/or assets to generate more cash flow. I am now on my way to be a multi-millionaire because of this simple concept. After you read or watch Mr. Kiyosaki’s explanation on the CASHFLOW Quadrant™, you will better understand what I am talking about.

Now remember, even though the concept is simple, it doesn’t mean that building a business is easy. It is actually quite the opposite. But, we have all been born with an innate ability to make mountains move if we put our mind to it. I always ask people that complain about their current financial position; “Why not get into a residual income business and get out of your current situation? If you don’t, you will be in the same, if not worse (because of the current economy) predicament you are in now. So DO something about it!” The point is, you have absolutely nothing to lose to go in a different direction, but you have a life to gain.

The following information contains excerpts of the CASHFLOW Quadrant™ written by Robert Kiyosaki (author of Rich Dad Poor Dad). This book is what changed my whole thinking about what a financial life should look like. There is plenty of abundance available for all of us. We look at the rich and think, “He/She must have got a lucky break” or “Must have been feed with a Silver Spoon”, when the reality is that the majority saw exactly what I am trying to convey here; put what assets you have, drive, and imagination, into massive action and you will reap the rewards.

Cash Flow Quadrants-Robert Kiyosaki

Each of us resides in at least one of the four Quadrants of the CASHFLOW Quadrant™ (see picture).

Where we are in the 4 quadrants is determined by where our main source of income comes from. Many of us live paycheck to paycheck and are therefore employees for someone else, while others are self-employed building their own business.

Mastering the Cash Flow QuadrantEmployees and self-employed individuals reside on the left side of the CASHFLOW Quadrant™. The right side of the CASHFLOW Quadrant™ is for people who receive their cash from businesses or investments they currently own.

My Rich Dad told me a simple story when I was 12 years old that has gave me direction to great wealth and financial freedom. It was Rich Dad’s way of educating me on the difference between the left side of the CASHFLOW Quadrant™, the ‘E’ (Employee) and ‘S’ (Self Employed) Quadrants™, from the right side of the ‘B’ (Business) and ‘I’ (Investment) Quadrants™.

Difference between the Self Employed and Business Owner

Once upon a time there was this quaint little village. It was a great place to live except for one problem. The village had no water unless it rained.

To solve this problem once and for all, the village elders decided to put out to bid the contract to have water delivered to the village on a daily basis.

Two people volunteered to take on the task and the elders awarded the contract to both of them. They felt that a little competition would keep prices low and ensure a backup supply of water.

Self-Employed Thinking

The first of the two people, Ed, immediately ran out, bought two galvanized steel buckets and began running back and forth along the trail to the lake which was a mile away.

He immediately began making money as he labored morning to dusk hauling water from the lake with his two buckets. He would empty them into the large concrete holding tank the village had built.

Each morning he had to get up before the rest of the village awoke to make sure there was enough water for the village when it wanted it. It was hard work, but he was very happy to be making money and for having one of the two exclusive contracts for this business.

Business Owner Thinking

The second winning contractor, Bill, disappeared for a while. He was not seen for months, which made Ed very happy since he had no competition. Ed was making all the money.

Instead of buying two buckets to compete with Ed, Bill had written a business plan, created a corporation, found four investors, employed a president to do the work, and returned six months later with a construction crew.

Within a year his team had built a large volume stainless steel pipeline, which connected the village to the lake.

At the grand opening celebration, Bill announced that his water was cleaner than Ed’s water. Bill knew that there had been complaints about dirt in Ed’s water.

Bill also announced that he could supply the village with water 24 hours a day, seven days a week. Ed could only deliver water on the weekdays. He did not work on weekends.

Then Bill announced that he would charge 75% less than Ed did for this higher quality and more reliable source of water. The village cheered and ran immediately for the faucet at the end of Bill’s pipeline.

In order to compete, Ed immediately lowered his rates by 75%, bought two more buckets, added covers to his buckets, and began hauling four buckets each trip. In order to provide better service, he hired his two sons to give him a hand for the night shift and on weekends.

When his boys went off to college, he said to them, “Hurry back because someday this business will belong to you.” For some reason, after college, his two sons never returned. Eventually Ed had employees and union problems. The union was demanding higher wages, better benefits, and wanted its members to only haul one bucket at a time.

Work Smarter, Not Harder

Bill, on the other hand, realized that if this village needed water, then other villages must need water too. He rewrote his business plan and went off to sell his high speed, high volume, and low cost, clean water delivery system to villages throughout the world.

He only makes a penny per bucket of water delivered, but he delivers billions of buckets of water, and all that money pours into his bank account. Bill had developed a pipeline to deliver money to himself as well as water to the villages.

Bill lived happily ever after, and Ed worked hard for the rest of his life and had financial problems forever after. The end.

That story about Bill and Ed has guided me for years. It has assisted me in my life’s decision-making process. I often ask myself, “Am I building a pipeline or hauling buckets?” Am I working hard or am I working smart?”

And the answers to those questions have made me financially free.

How the CASHFLOW Quadrant™ Comes Together

Through Mr. Kiyosaki’s explanation of the CASHFLOW Quadrant™ above, you can clearly see that he feels the right side of the Quadrant is the best side to be on for building wealth. But what about the “E” (Employee) and “I” (Investor) Quadrants?

As an Employee, you work for someone else and are taxed at the highest rate of all Four Quadrants. Most people stay in the “E” Quadrant because of fear; lack of health insurance, stability, etc, but what they don’t see is that they are NOT being paid for what they are worth. The market has a funny way of driving the value of the employee down so the corporation can make the money. Does this sound familiar; “I should be paid way more than I am for doing this job!”? Of course it does because the majority of “E’s” feel this way.

The “S” (Self Employed) is in a better position than the “E”, but not by much. Yes, they probably make more income than the “E”, but they work day in and day out for this “freedom” and they still trade time for money.

The key to building wealth is getting on this right side of the CASHFLOW Quadrant™ by owning a business and pouring the residuals (mailbox money) from the business into the “I” (Investor) Quadrant. Owning a business is different from being self employed because the “B” (Business Owner) leverages the work of other, as in the example above, to generate streams of income.

Look at Bill Gates who owns Microsoft. In 1975, Brilliant Bill developed an idea and started hiring people to make his idea come to fruition. He now has 90,000 employees that basically run his company and his mailbox is full of money. This is one example of a “B”, but let’s look at a few others.

Buying a franchise is another form of “B”. Although it is quite expensive to start a franchise ($250,000-$2,000,000), it can grow to produce residual income for you and your family. The negative here is the outlay of cash and the amount of work upfront to get it rolling.

A third, and a more increasingly popular form of the “B” Quadrant, is Network Marketing. In Network Marketing or Multi-Level Marketing (MLM), a person buys into an already existing business model, but for a much lesser cost. The usual cost outlay to start in a Home Business like this is generally $50-$2,000. What the business entails is acquiring customers for a particular product AND business partners to work in your organization for the financial betterment for themselves and you. You are not only paid in the volume that you bring in, but also the volume of your business partners’. People sometimes consider Network Marketing as a selling business, but it is actually more about teaching. To make this even more “hands off” is that usually the Company has a system that one uses to build their businesses. The system is duplicatible meaning that each person uses the system to duplicate their businesses. Hence, you are plugging people into the system and letting the system help to build your business.

This form of the “B” Quadrant, Network Marketing, is by far the most attainable form of building a business. 98% of the population cannot afford to buy a franchise nor do they have an idea that could take off like Bill Gate’s idea did. With Network Marketing, you come into the business with very little cash and usually can be in profit that first month. It is a smaller form of what Gates did because you are leveraging the work of others in your organization, but they are not considered “E’s” because they are building their own businesses, so they are “B’s” also!

The only negative of being in the “B” Quadrant with this form is that you usually have to stay in the “E” Quadrant until you match your income that you get from your day job. The good news is that you are your own boss in MLM so if you only have 5 hours per week to build it, you can do it. A person building this way usually can expect a 3-5 year period of building before you can expect to leave your J.O.B. (Just Over Broke)! What I tell people is; “Even if it takes this amount of time, what would you be doing with those 5 hours a week anyway? Watching T.V.?” Use your down time to help set you free.

Once your Network Marketing business has grown to a level of residual income that is 150% over what you made at your job, one can start pouring the extra funds into the “I” Quadrant. For me, I have chosen Oil & Gas and use my extra income to buy already producing wells which deliver a residual check on a monthly basis.

With a Network Marketing Home Business, the residuals are uncapped, meaning you could potentially make as much as you want on a monthly basis. This will obviously take time, but there are many that generate in the hundreds of thousands of dollars per month because of MLM. What could you do with that residual overflow in the “I” Quadrant? Quite a bit!

Where to Start?

I have been with a Network Marketing company by the name of Life Force International for several years. Life Force has several attributes that set it aside from the majority of MLM companies out there and has been considered one of the best Network Marketing Home Businesses around today to use to build wealth for you and your family.

I wrote an article a while back explaining these attributes and how important they are in the success equation. For example, Life Force pays out 60% of every $1 that comes into the company; back out to the field when the average MLM is at 38%. A second attribute is that Life Force’s initial outlay of cash can be as low as $50 making the barrier to entry almost non-existent.

To view a presentation on Life Force’s products, company information, and business plan, please visit our Life Force Presentations page.

If you know that you want to join our team, please visit our Join Now page. Also, if you would like to buy the CASHFLOW Quadrant™, click here.

Remember; make your money work FOR you!

The Balance You Need Team-Ben Mueller

Disclaimer: This article does not make any guarantees on income. Each person is different and income levels may take a shorter or longer time frame or may never happen at all. The point is that everyone has the opportunity to make their financial lives the way that they want them and I have found that Network Marketing was the vehicle that has worked for me.

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