Creating a Living Margin
There are many basic ideas and strategies that you should know before setting out on your journey to creating a living margin. Focusing on your cash flow instead of current market conditions or trends will likely lead to positive results.
Too many people focus on how to beat the market or avoid the “crash.” Instead, explore opportunities that fit within your financial goals and adjust accordingly to “outside” economic forces.
Many people want to skip this area. It seems boring and unimportant in the big picture. However, if done correctly, setting up a cash-flow “holding account” can be the most rewarding part of your financial plan. The only problem is that you won’t be able to see just how important it is until you’re well on your way.
Understanding the risks and stages of your journey to financial freedom is essential. Only once you grasp the likelihood of success will you devote your time, talent, and treasure to pursuing your passion with purpose. Creating a living margin will include building your foundation, working towards security, and leveraging your cash flow to achieve financial freedom.
Step one ensures you have the “controls” to manage your cash flow. To get started, you’ll need to go through your "budgets" to prepare your financial plan, which will help you to allocate a portion of your cash flow to your “holding account.”
Step two is where you’ll achieve financial stability. At this phase, you’ll focus on activities that’ll give you the desired security. You’ll know how much you’re allocating towards your financial goals, and with this money, you’ll open and fund your “holding account.”
Step three is all about leverage and options. In this phase, you’ll use strategies to leverage your “holding account” to participate in various income-producing opportunities and fund major expenditures.
Now, instead of the bank making all the money, you, as the borrower and the lender, reap the rewards once reserved for banks utilizing the fractional reserve system. Each time you add value to your “holding account,” you will have more cash flow to work with.
The “holding account” simply helps you stay focused on your goals because you can see the effect of allocating your money to your financial freedom. You can be sure you’re making an educated decision each time you use your cash flow because you can see your economic position in real time.
And, if you happen to get off track, you can instantaneously reset the numbers to get back on track. The living margin (cash-flow framework) is not a theory or an idea. It is an actual financial tool that, when utilized, can guide you to financial freedom as quickly and efficiently as possible for your unique circumstance.