We’ve all heard the stories: people win the lottery and are broke five years later, famous athletes and musicians file for bankruptcy; and the concept of “high-income poor people.” The fact is, many middle-class Americans are woefully unprepared for their golden years, though they may lead a relatively well-off lifestyle.
How I explain money, cash flow, and finances to my kids
Fill the bucket passively
As you go about the business of pouring cups in, this steady stream relieves some of the pressure of racing to fill holes, and allows you to focus on things that are more important – your family, friends, and your life goals.
- grow your money even when it’s being used someplace else
- arbitrage interest rates like the banks do, by borrowing low and lending high
- financially protect your loved ones should anything permanently shitty happen to you – permanently.
Many financial experts aren’t telling us the whole story.
We are taught to get a job, invest in “high risk, high reward” models, or low-risk, slow reward vehicles such as a 401k. But there is another way.
If we adjust the way we think about our finances, work diligently to plug the holes and build passive income, we will eventually find that we’re going to need a much bigger bucket!