How to Know When You've Already Won Financially

I'm really amazed with so many people that I talk to that, as you know, the metric of net worth has a place in your financial world.

But I think when looking at your actual health and your actual plan, I find, and I've talked about this before in past episodes, the problem with net worth is that net worth, while it's an important factor as far as telling you your total assets minus your liabilities, it gives you some sense of maybe where you are It's not particularly great at helping you with a financial strategy of understanding the kind of investments that you have, your liquidity, or really how to work your investments in a way that are going to create clarity and safety for you.

And that's really the key issue here.

So what I would say to you and what we've talked about is when you look at cash flow over net worth, what you're really looking for is available cash that you can invest.

And remember, how do you win the financial game? No one ever tells you this.

And if you don't know how to win the financial game, then you're basically playing a game you don't know.

And if you wonder why maybe you're a little confused or a little unsure, even though your financial planner talks to you, it's because no one's really giving you an end game of how to win.

So how you simply win this game for most people is you know how much you're burning.

When I say burning, you're burning.

How much do you spend per month or per year? And we're going to talk about that later.

I'm going to help you with this if you don't know that number.

And how much income is coming in? And for those of you earlier in your lives, a lot of times when I say how much money is coming in, how much money is coming in from your active income? which is the money from your job, your product or service, and how much is coming in from your investments.

And here's the winning formula.

It's super simple.

When your active income and passive income are higher than your burn rate, you've now won step one.

You've won.

You've won the financial game.

Ta-da, relax your shoulders, high five your friends, celebrate your good.

There's a lot more to it, but we're gonna get you to it.

The bonus round as you get older with this is you really wanna get to the point that if you can save enough because your active income in your job is now giving you enough money to create some savings and some investments.

Well, now you're relying less on your job and slowly over time, you're relying more on your passive income, which is basically the money coming in from your investments, the money while you sleep, the money from your real estate investments, your oil investments, your stock dividends, your art collection, Oil and gas, on and on and on, it can kind of take you through each asset class.

But literally, it's your mailbox money, the money that's coming that takes none of your effort.

Your liberation comes when you can get to the point where it's all coming from your passive income.

And that is like the double win bonus, celebrate, blow the horns, you've won.

And the problem for a lot of people, and it amazes me because I coach a lot of people who have a tremendous amount of net worth, And the problem is they don't find that safety because they're really not clear on the winning formula.