My Personal Finance

… Especially when you Spend More than 85 % of what Ghana

For this edition I want to tackle a topic that we have not treated in the previous editions of “My Personal Finance” and it has to do with the importance of having additional income and what type of additional income is more suitable to structure to be able to construct a life of financial safety and where the most important element is to be able to have QUALITY OF LIFE …

In other words to be able to be provided with more income, but without diminishing another variable of the equation of quality of life: the Time.

The first element that a family or a person must achieve to be able to be really financially healthy and to have possibilities of constructing a wealth life is to learn to generate cash flow. Saying in other words to it not wear out quite what enters his pocket to him.

When we wear out quite what brings us in, we do not have the minor possibility of two things: the first one of being able to plan those targets that are important for our lives and the second one, to be able to construct a patrimony and generate wealth.

The recommendation that I do to him is that maximum you, good be heard, maximum should live or there should wear out 85 % of the income that it generates. I have learned in the last 10 years through that the one who does not do it thus is living over his possibilities and worse than that, the most possible thing is that he is structuring a very weak financial life and with a high risk of entering financial problems.

Now well to be able to raise his cash flow you have two and only two options: or it diminishes his expenses or raises his income.

To lower the departures has to do with strategies of budgeting, control, self-discipline, analysis of his particular financial situation, tributary optimization, between others. I am not going to develop this point to depth in this bulletin, but rather I am going to concentrate on another way of increasing his cash flow and that is to raise his income.

Namely I am going to speak principally to the persons who feel that there are already no any more forms in which they could lower his current expenses level. (Almost always there are points that can be optimized, but let's depart from this premise).

Then, if there is not more ingenious in that they could lower the monthly expenses, only we have left the possibility of learning to generate additional income. To discover how you become good in generating more income for his family.

Nevertheless, I have realized that when a person comes to this point often it enters a conflict, which has to do with the decision to invest more time to generate more income.

The decision between dedicating time to additional income or between keeping on destining time to activities that generate satisfaction or quality of life depends on the value that every family or person gives to every variable of the equation: time + money.

But to what cost am I going to be ready to invest time to have income additional? Or …

Does to invest time in generating additional income go against my quality of life? Or …

Am I taking time from my family and from the things that more give satisfaction to me in the life to generate additional income?

If it agrees with me all these questions or reflections that we do to ourselves are very valid …

Nevertheless, I believe that it is important to do the difference between looking for additional income that take time from you indefinitely and that do not have the minor possibility of turning into passive income for his family and the additional income that unlike the first ones can turn into passive income and therefore there will be one more lever to construct a better quality of life … that is to say they are going to help to buy to him his time.

The linear income is that that are always going to need of his presence to be received. Therefore if you do not realize the work that they them never produce they are going to exist.

The passive income is that that you can receive product of a work that you realized in the past and that you will receive you are present or not.

For example in the industrial economics the persons who typically were receiving passive income could qualify according to my opinion in some of 4 groups:

You present yourself with investments in property root that passive income was receiving route the rental of his properties.
You present yourself with investments in the financial sector that were receiving his passive income route the yields of his investments.
You present yourself proprietors of medium or big companies that were provided with a representative administration of his company and passive income was receiving route dividends.
Persons who were receiving passive income route privileges related to topics of intellectual property, inventions, musical compositions, etc.

Or that for the groups 1, 2 and 3 needed to be counted with capital to be able to enter the world of the passive income. And to belong to the group 4 the majority of the times had to do with talent or with extraordinary aptitudes.

Now then, in the new economy fortunately for many of us there are options different from the previous ones to be able to achieve additional income that are of passive nature ….ese it is the point.

Unfortunately, on having wanted additional income, many persons focus in additional income of linear type and not in additional income that can turn into additional income of passive type or with residual behavior.

For example they think about how to teach in the nights in universities, look for another work, focus in giving more consultations to patients, in giving more consultancies, etc.

I do not have anything against these alternatives, they nor have anything of villain … he is more many persons they can do it for the simple taste that it provides to them, but the important thing is to realize that, on having done it, you are changing time into money, for what is virtually impossible to be able to have the two simultaneously.

Namely there is achieved the target to have additional income and therefore to improve his cash flow, but reducing value to another variable of the equation of quality of life: the time.

My recommendation at the time of looking for additional income for a person or for a familiar nucleus it is to look for additional income that apart from improving the cash flow, have the possibility of being passive income some day.

Namely that perhaps in the initial stage diminish his free time, but that to you to evolve with his activity, the income little by little is increasingly of the passive type.

Initiate little by little an activity where you have the last word, where you are the chief. Start little by little … but with a big vision.

I speak about the vision because I am sure that it is one of the most important characteristics at the time of increasing his economic intelligence.

Saying is of step the economic intelligence one knows, according to some experts like the skill of being able to generate more and more income for his family and differs from the financial intelligence, which focuses in how being able to generate wealth administering of the best form the income that it has.

Therefore, I recommend to him to extend the vision with the reading, with the association with persons who have the results for that you wait, with courses and seminars.

Learn of those who have the fruit in the hand, of that they consist where you want to be.

Develop his creativity … read very much … the reading it is going to turn it into a person much more creative than you imagine.

Although I am sure that of all the persons we can learn, I recommend to him to find a mentor: someone who lives like you wants to live …

I believe that there are already too many persons teaching to do things that have never done in the daily life and to achieve things that they could not have achieved themselves. My opinion is that we all need a mentor for every area of the life.

Important to have a humility attitude, of wanting to learn and therefore of being ready to change our way of thinking and of how do we see the world.

The form as we think that it has led us to obtaining the results that we have nowadays, then if we want to change or obtain other results I believe that it is sensible to be ready to incorporate new beliefs in our way of thinking.

Unless it has enough experience in business or in the managerial world, starts in child and not in big. With this I do not mean by any means that does not think in big. On the contrary, I believe that he must think in big, but to start in child …

Do not invest sums of money that for you are unmanageable or that represent an exaggerated debt level.

You do not want for having additional income to lose what it has achieved till now and to put in risk the life style of his family. Nevertheless, if decide to do it, must realize that it is entering the world of the risk capital and must be prepared to lose 100 % of the resources that he is investing in his business project to generate additional income … 100 % of the resources heard that!

Rather start little by little, but with a business plan clear and structured where you want to grow and want apalancarse in the money of others, in the time of others, in the experience of others and in the knowledge of others.

Look for activities that include the elements and the rules of the new economy … I suggest him to prefer these that the business based on the ancient rules and on the models of the obsolete industrial age … that does not mean that they do not work, but probably the successful being is going to be more difficult for you.

This implies breaking paradigms … there says Tom Peters that the laws of the game have not changed but the game itself is the one that has changed!

Network Marketing
Business models based on Internet
Business opportunities with China.
The industry of the well-being. (I recommend to him the book “The Next Trillion” of Paul Zane Pilzer).

Once decide what he wants to do to improve his cash flow across additional income that could turn into increasing and passive income focus in that … AVOID to relax …

He have time to that the things work for you … all activity retake an acople time … it is normal … have a mentor to whom it could report … cover the way and prevent the proper frustration and the lack of motivation of facing the challenges of making something additional from stealing from him his sleep and his desire to achieve this life that you want!

Suddenly, the way of looking for traditional additional income and without any possibility that they are passive be easier and simpler, and this way it is probable that yes it manages to improve his cash flow and inclusive that it has a life financially healthy, but the surest thing is that it will be very much difficult really to arm a life where the money and the time they are in balance … what for me is really what there mean these three words that sound so well QUALITY OF LIFE.

What if I assure him is that if decide to break the paradigms and to risk to look for additional income with the potential of being passive income, the way is going to be much more exciting and entertaining … and the result probably fascinatingly!

PD: If he wants to recommend him to a friend to subscribe to the bulletin "My Personal Finance" click