The Education Deficit

From algebra over literature.
From philosophy to modern arts there is no shortage in school.
Everything possible is taught,
extensive education seems to be the objective of formal education.
Nevertheless there is barely a word mentioned about managing a household,
communicating proactively with people or finding one´s personal purpose.

 

Just a very few really work in a job they would also choose, if they didn´t have the need for the money.
But why does it seem so hard nowadays to earn it, but by working hard?
Sadly that´s all due a lack of financial education.
For example barely anybody can read a balance sheet or an income statement.
An extensive amount of people even struggle managing their own personal finances.
Therefor it´s not surprising that they don´t, in fact will never reach financial independence.

Formation to eternal employees

It already starts, when we are little kids: our parents, our teachers and our even our coach tells us to study hard to get good grades. Because that will give us the opportunity to find a well-paid employment when we are older.
And exactly this is the goal of the school system:

To manipulate and train young people to work for others.

They give us math problems to figure out, essays to write and science projects to create.
And all of that we cannot choose by ourselves.
We must do exactly what we are told to.
Because that’s the way it will be, when we are grownups and working for somebody else.
As a result, you will be hustling around trying to build yourself an income based on your hour loan.
Meanwhile the person in charge of you will be profiting from the income you created to his business.

 

 

How to become the person cashing in the profits?

You first need to start working for yourself!

Don´t understand it?
Working for yourself means, that you work for your personal interest.
If you work for somebody, you are making some money for yourself.
But eventually you are increasing your boss’s paycheck by far more than yours.

So, stop working for somebody else and start working for yourself!

Cashflow

 

As soon as you begin working for yourself, you need to focus on building a positive cashflow.

This single, simple word ought to be everyone´s daily prayer.
It does not matter if you are a house cleaner to insurance manager, understanding your cashflow is essential to increase your income and eventually being able to quit your stupid 9 to 5 job.
The monthly Cashflow describes the amount of money, which remain from your total income after subtracting your total expenses. Your cashflow can be negative of positive, but you should aim for a positive cashflow.
If you have a positive cashflow that means, that you earn more than you spend.
In effect you have a surplus by the end of the month.
Although if your cashflow is negative, you have a deficit.
If that is true in your case, read on very carefully, because this negative cashflow literally burns your freedom.
Just follow the following formula to calculate your personal monthly cashflow:

monthly cashflow = monthly income – monthly expenses

 

So read this following passage thoughtfully, as it will be the key to your future as a financially independent person!

The cashflow effect

By creating passive income, for example through a business, stocks or real estate you can step by step increase your income.
Because as soon as the stocks you bought starts to pay dividends, you can buy more stocks with that money.
Now, more stocks will generate more money for you and so on and on.
Your money will grow exponentially, without having to work for it actively.
This is the secret of compound interest.
It´s that simple.

But as with everything there is also a downside to compound interest.
Because it can also work against you.

Whenever you have a negative cashflow, that means that you are losing money each month and your loss keeps on getting disastrous over time.
Again thanks to compound interest, your expenses now, grow exponentially.
Because in order to pay back your loss, you will have to take a loan.
The monthly payment on your loan will increase your expenses and even worsen your situation.
Therefore everything that increases your monthly expenses are liabilities.
The key to increasing and building a positive cashflow is to create assets.

Assets and liabilities are often confused.
But think about them this way:

A liability takes money from your pocket.
A assets add money to your pocket.

Sticking to this method of categorizing you will soon discover that a house, a car or a yacht are no assets. They take money out of your pocket.

As soon as you understand the difference between assets and liabilities you can focus on building assets to increase your passive income.
By the time your cashflow exceeds your total expenses you are financially independent.
From that point of you do not have to work anymore because you passive income generate more money than you spend.
You only need to maintain those income sources from now on.
But of course you can extend them as well, to even further increase your cashflow and your wealth.

 

You only need to understand this simple graphic to understand the basic paradigm of financial independence.

You and everybody on this planet should understand this simple principle as it is the key to financial independence.

Still here?
You first need to start, work hard and sweat before you can lean back and relax!

If you want to find out how people scrape together the motivation necessary to get up at 5 am to hustle until late at night

If you want to learn how to talk to people, persuide and lead people click here.

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