- Create multiple income streams, reduce taxes and plan for the worst-case financial scenario.
- Plan out three years of income needs and adjust to changing economic and market circumstances.
- When it comes to winning the cash flow game, never take your eye off the ball.
Remember 30 years ago when you could get 10-year CDs and 30-year government bonds yielding 9 percent a year? Compare that to today, when you’re lucky to get a 2 percent-yielding long-term CD. High-yielding low-risk income streams don’t exist for most of us right now, so that’s why I want to share my five keys to ensuring consistent cash flow:
- Build multiple income streams. If you’re working, you want a tax-advantaged retirement plan like a 401(k) to supplement Social Security—especially if your employer doesn’t have a pension plan. You can also build up supplemental income streams by putting your personal assets to work—renting out your home or vacation home for instance—which has never been easier in this shared economy. Take on freelance work separate from your full-time job; it’s never been easier in today’s gig economy. Bottom line: You want diversified income streams at all times.
- Reduce income taxes. Up to 40 percent of your income can be eaten up by income taxes, and so you have to do whatever you can to reduce your tax exposure and build wealth successfully.
- Plan for the best, but assume the worst. We have bad economies. We lose jobs. We get divorced or suffer the death of a spouse. This stuff happens. You need to have a plan for getting the income necessary to deal with these difficult transitions in life.
- Plan your income needs three years out. Be realistic about your expenses and income needs over the next three years, and ask yourself how you’re going to meet those needs under any circumstances. Can you meet your financial obligations through loans, your personal portfolios and retirement accounts if worst comes to worst? Where is that money coming from?
- Adjust to the economy and financial markets. Life changes all the time. Sometimes you’ll want a lot of cash sitting on the sidelines. Sometimes you’ll want to be fully invested. Sometimes you want to reallocate your portfolio due to changes in the economy and the marketplace. You need to be constantly vigilant about how your assets are deployed.
These five keys for consistent cash flow are something to keep top of mind at all times. It’ll make life a lot simpler, especially when bad stuff happens.
Speaking of simplifying life, we have our Spring Cleaning Barbecue on June 4, from 10 a.m. to 2 p.m. right here in our parking lot. Also, June 14 is our free workshop about authoring a book in 90 days. Get all those great stories and anecdotes out of your head and out to your friends, family and followers.
Until next time, enjoy! Gary
We value your comments and opinions, but due to regulatory restrictions, we cannot accept comments directly onto our blog. We welcome your comments via e-mail and look forward to hearing from you.