The 3 C’s of Money
A Simple Concept For Creating Financial Abundance
We’re taught a lot of things from the time we’re born until the time we leave the nest.
- We recite the primary colors.
- Anyone I know can rattle off the five main food groups.
- In school, we write reports on subjects such as the Great Wall of China and read good literature like the works of Faulkner.
All of these things are well and good. What we’re taught virtually nothing about at home or school is how to manage our own money. And face it, the financial abundance, or lack thereof, which we create makes an impact on the quality of life we live.
Sure, maybe in high school and/or college, you took an economics course or two—micro or macro or both. You walk away with great, objective, important information on financial issues and on frequently vague theories that (if you try hard enough) you can apply sort of tangentially to your own life.
Maybe your parents even helped you open your first checking or savings account while you were still in high school. Then, as an adult, you and your budding career set off to ride into the sunset with a knapsack full of dreams about all the money you’ll make. Before you know it, your finances are more confusing than you ever imagined. Between credit and consumer debt, perhaps a few investments, and maybe even multiple incomes, your financial picture is more like a hologram with lots of moving parts.
With a trial-and-error approach, you try to pin down those tricky, elusive parts but finally walk away; figuring that as long as you’re making the money, everything else will fall into place. All the while, though, you’re looking over your shoulder. It’s a mistake that most people make: we assume that when it comes to money, making it is all we need to address. Let’s set the record straight here and now. Making it is only the beginning. I’d like to introduce you to a concept to help simplify your approach to money; it’s called “The 3 C’s of Money” .
The 3 C’s refer to:
- Cash Flow Creation
- Cash Flow Management
- Cash Flow Investing.
The 3 C’s of Money are not mutually exclusive. Each affects the other, and the Creation and Management help to grow the Investing, which is the key to building your financial well being. Ask yourself these questions:
How long can the human body go without food? 3 to 4 weeks. How long without water? 5-7 days. How long without Oxygen? 5 minutes and you die. Oxygen is critical to your body!!! It’s a matter of life and death.
So what is “Oxygen” to your wealth? In other words, what is essential? The answer is CASH FLOW. Of course!
When the creation of cash flow starts to disappear, we start to have the same negative responses as we do when oxygen leaves the body; it’s game over!! For most people, income is where it all begins, but not where it ends and there are two primary types of income to consider: Active Income refers to income you make when you are trading your time for your money. Whether you earn a salary, a fantastic hourly wage, or a project-based income, you are trading hours for dollars. If you are self-employed or building a business that can’t run without you, you have active income. There’s nothing wrong with active income, except that you are never really free. If you have active income, you want to make sure that you are investing in high income producing activities. If you run a business, focus on doing the 20% that creates 80% of the rewards: SELLING first to create cash flow, then recruiting the ultimate team to replace you!
Passive Income refers to money that is generated without your direct daily efforts and it falls into the cash flow creation and cash flow investing categories. Royalties, intellectual property, licensing, business investments, and real estate can all create passive income. Other forms of investments such as stocks, bonds, commodities and other investments may generate passive income in a portfolio, as well. The real outcome is to find ways to increase your cash flow to the point that your passive income exceeds your expenses, so you are “out of the rat race”. Robert Kiyosaki’s board game, Cashflow 101, is an essential and fun tool to get you thinking outside the box of earning money this way. Increased cash flow will also mean you have more assets to manage and invest.
A great exercise to expand your thinking of what’s possible is to list 50-100 ways to create cash by means other than what you’re doing right now. The possibilities for creating multiple streams of income are endless.
Cash Flow Management Okay, this is where the going gets tough for some people, and most people hate the idea of looking at the numbers and paying bills but it doesn’t have to be that way. Ironically, the opposite is true. Not being “accountable” with your money makes things exponentially more difficult in the long run. Remember, the real long-term, big picture goal of money management is to move out of the rat race! That grand exit=Freedom!
The first thing to do is to identify and address any problems that may be preventing you from efficiently managing your money. Our coaches look in 3 areas:
- Skill set: is the client missing the actual knowledge on how to manage money and read reports?
- Mindset: Does the client have limiting beliefs and emotions that have led to habitual patterns of self-destruction?
- Environments: Does the client need to eliminate environments that are draining them and upgrade to new empowering environments?
Remember, the problem could be an innocent lack of knowledge; a lack of a management system, software, etc.; a negative belief system about money or your own abilities or any combination thereof. 90% of the time, people simply need to reallocate their monies and how they are spending them. You’d be surprised how much cutting back on “little things” will save you. Make coffee at home and use gourmet creamers instead of plopping down four bucks a pop for those lattes! And exchange your pricey gym membership for walks and hikes. Your next step is to decide how you want your financial life to look. What does financial success look like and feel like to you. Once you’ve determined that picture, keep it dynamic and set up environments of accountability with a monitoring system, a coach, and/or a Mastermind Group.
You’d be surprised at how much sharing your dreams and burdens lightens the load and crystallize your vision! At every step of the way, keep asking yourself these four key questions: * What are my financial goals? * What skills do I need to develop to master the 3 C’s? * What mindset do I need to adopt to create wealth? * What environments do I need to design to pull me into financial freedom?
When it comes to the 3 C’s of your money, be conscious and flexible about what percentage of your time you invest in creation, management & investing. As a rule of thumb, devote 80-90% of your time to creating and investing your money and 10-20% of your time in managing it. Creating wealth and abundance really comes down to focus, intention…and the joy with which you pursue it all!