In my previous two posts, we looked at types of expenses, and which ones to cut out (the destructive kind). In these next few posts, I’ll explore ways in which you can retain more of your income, by plugging up the holes in your cash flow.
Imagine you’re trying to fill a bucket with water. You put a hose in it and turn the water on. As the water rises, it starts gushing out of gaping holes in the bucket. What would be a smarter way to fill the bucket: increase the flow so that the water coming in is greater than the water going out, or stop and plug the holes in the bucket first?
The answer is obvious. Unfortunately, it’s not so obvious when it comes to finances. Everyone who hasn’t achieved financial independence thinks they’re not rich because they don’t make enough money. They have to make more money, so the logic goes, so that they can then have discretionary income to invest.
In other words, they try to turn up the flow of water while ignoring the gaping holes in their buckets. Furthermore, most people don’t even see the leaks.
Most personal finance gurus will tell you that the key is cutting your expenses, and scrimping like a miser. But there’s a much smarter way to approach this. What if you could free up substantial amounts of monthly cash flow without tightening your belt and budgeting? The best places to look to free up more cash flow aren’t your daily latte or your cable budget. Rather, they are places like your insurance and taxes, which can yield far more cash flow if structured more efficiently
Caveat: Some people really do need to reel in their expenditures. They’re spending freely with no regard to the future. They’re addicted to consuming. I’m not saying you shouldn’t give any consideration at all to your consumptive expenses. I’m simply saying you can’t shrink your way to wealth—you have to work smart, not just hard.
In the experience of my 5 Day Weekend Garrett Gunderson, who’s worked with thousands of people, more than 10% of most people’s income is being lost in ways that most people don’t even see, such as overpaying on taxes and paying for hidden investment fees.
When you discover and plug these holes in your bucket, your income is immediately increased without changing any of your spending habits. Sacrificing a bit may help expedite the process, but there are proven ways you can recover the most cash flow.
I will go over these in detail beginning with my next post. In the meantime, I’d love to hear from you. Do you need to reel in your expenditures? In what way? I appreciate your thoughts. Thank you for sharing.
Secure your copy of the “5 Day Weekend” book. 5 Day Weekend: Freedom to Make Your Life and Work Rich with Purpose [Nik Halik & Garrett Gunderson]
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