Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Net Worth is Good, but Cash Flow is Better

By Keith Wheelan Subscribe to RSS | May 14th 2012 | Views:
loading
 
  



You might have seen some TV ads recently where people literally carry their retirement “number” with them. Each person’s number varies, but it’s usually in the $1-2 million range.

I like these ads because they reinforce the importance of setting a measurable retirement goal. But merely having a “number” like the ones in these commercials isn’t enough. Why not? Well, in the first place we don’t know what the number represents. Is it net worth? Is it investable assets?

Second, how does that number pay for your retirement expenses? In our previous article we discussed how retirement expenses can be grouped into two general categories: lump sum purchases or ongoing expenses. Lump sum purchases include such things as a house, cars, possibly a big trip or vacation. Ongoing expenses are recurring living expenses - monthly utility bills, food and clothing, regular insurance payments, etc. Somehow your “number” has to cover both categories of expenses. But how?

Some assets generate cash flow and some don’t. That’s the missing ingredient.

Retirement “numbers” usually refer to net worth, which is a measure of your wealth. Let’s say your number is $1.5 million, and it represents your net worth at retirement. There are many combinations of assets and liabilities (debts) that result in a net worth of $1.5 million but to keep things simple let’s assume further that you have no debts. So you have $1.5 million in assets and no liabilities. You are a millionaire with no debts. Nice going! But we still need to make another assumption - about the composition of your assets.

Some assets generate cash flow Financial Planning and some don’t. That’s the missing ingredient. Cash flow-generating assets can be used to pay for ongoing living expenses. And if your assets generate enough of a regular income stream - enough monthly cash flow - to pay for both your ongoing expenses and your periodic lump sum purchases, then you will have become financially independent.

That’s really the ultimate goal, isn’t it… Financial Independence Having a large net worth “number” - having wealth - is good. In fact, it’s necessary. But it might not be enough to pay the bills. For that you need assets that generate cash flow. That’s even better.

But why wait until retirement to acquire assets that generate cash flow? Wouldn’t it make sense to start accumulating them when you’re younger?

Keith Wheelan - About Author:
Keith Wheelan, is a professional financial planning advisor for "Cash Flow Navigator" helps to empower members of cashflownavigator community to successfully plan for and achieve financial independence. for more info visit http://www.cashflownavigator.com/

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/finance-articles/net-worth-is-good-but-cash-flow-is-better.htm

Related Finance Articles Subscribe to RSS

Same day loans no credit check - fight with the devils of financial crisis
Published by Sam Hopkins on December 3rd 2011 | Finance
Same day loans no credit check provide instant funds to an individual without looking into their pas...
 
Payday Text Loans UK- Mobile phones give financial amounts!
Published by Cameron White on December 8th 2011 | Finance
Payday text loans UK is best way to overcome small fiscal hardships and it’s not difficult to get ...
 
Short Term Loans: Fills the gap during financial crisis
Published by Annisa Nelson on June 5th 2012 | Finance
A short term loan manages your sudden expenses and pays out short term monetary urgencies....
 
It is very hard to tell the worth of financial advice
Published by Ross Sorin on March 13th 2012 | Finance
People even in today’s fast times do not know the important of financial advice. The financial adv...
 
Loans for UK People: an easy financial solution
Published by Simuels Jack on June 11th 2012 | Finance
Loans for UK people are very helpful in times of need for monetary assistance. According to one’s ...
 
Free credit report no fee: know your financial standing
Published by Alice Marlen on May 25th 2012 | Finance
When you request for an extension of credit, loan or credit card, the promising credit grantor will ...
 
Missouri, a State with a sense of personal safety
Published by Insurance Inde on January 18th 2012 | Finance
Missouri State has some of the drivers who have a high sense of personal safety on the roads in the ...
 
HOA management- Capable providers for financial as well as property management
Published by Ema Sis on January 12th 2012 | Finance
HOA management companies shall be actual asset for communal administration amenities. They undertake...
 
Bookkeeping is important while deciding future financial policies
Published by Nelson on February 1st 2012 | Finance
Complete End to End Business Solution offering various services such as Incorporation, Bookkeeping, ...
 
Regain your financial standing through credit counseling Houston
Published by James on March 31st 2012 | Finance
There are lots of people who fall into a debt for different reasons. Usually after falling into a de...
 
Know the importance of the different financial forms
Published by Fiona James on April 27th 2012 | Finance
It is very important to have financial forms in order to complete any type of financial business smo...
 
Major reforms in UK financial regulation: Draft Bill and White paper produced
Published by Becky on March 15th 2012 | Finance
The most significant modification in a decade to the UK’s financial regulatory architecture began ...
 
Bad Credit Secured Loan: Huge financial support in spite of bad credit
Published by Ian Foster on February 2nd 2012 | Finance
Bad credit secured loan has introduce by the economics establishment to continue the people whose cr...
 
Could buying a motor from Used Car Dealers Blackpool make financial sense for you?
Published by Mary Porter on June 19th 2012 | Finance
Most drivers know that when buying a car, getting a brand new vehicle is often unnecessary and that ...
 
Loans for Unemployed: Lessens your financial troubles!
Published by Matthew Anderson on June 7th 2012 | Finance
Situations may become worse for unemployed people but loans for unemployed turn the situations bette...
 
Do you need assistance with financial debt that has been around for decades?
Published by Deby Suportie on February 16th 2012 | Finance
Debts can often be difficult to manage especially when it has been around for quite a while already....
 
Free Credit Score: right choice to understand your financial status
Published by Anthony Brian on May 15th 2012 | Finance
Every customer is granted one free credit score report from principal agencies each and every year, ...
 
Right Process of financial Planning and need of getting a Financial Planner Sydney
Published by Avena Sowell on December 8th 2011 | Finance
Process of financial planning involves high level of knowledge and skills as financial markets keep ...
 
Have a safe and secured financial life
Published by Pramod Kumar Singh on May 23rd 2012 | Finance
Know about the different financial investment options and invest in various financial products to ha...