Spending Priorities For A Cash Flow Investor

By | May 21, 2014

A passive income Investor must know their spending priorities if they want to obtain assets and grow them. Here is a sample chapter from AdviceAboutFinance.com’s New Ebook: How to Be A Cash Flow Investor. Get free access HERE

What you choose to spend on is vital to your long term wealth goals. As you accumulate cash flowing assets, what you spend on with the money you receive can determine whether you are financially free or still having to work a 9-5 job.

Here are the spending priorities of a Passive Income Investor:

 

 

 

Spending Habits of A Cash Flow Investor:
spending priority pyramid

The goal of a Passive Income Investor is to invest in assets that make you richer over time. Assets like real estate, stocks, or online properties are things that an investor would want to obtain over time. As such, the majority of your savings should be dedicated to accumulating these assets. That is why this category is on the bottom of the pyramid. However, sadly, most people do not know this, and many people choose to ignore long term investing over the temporary enjoyment they get from buying luxuries.

The difference between the spending habits of the rich vs the spending habits of the poor, is the amount of their incomes they devote to investments. An important distinction is that rich people buy their luxuries last. While the poor/middle class consumers buy their nice car, diamonds, gold jewelry, fancy vacations, furs, and boats to look rich, they have just spent their entire paycheck to obtain an appearance of wealth. The worst thing you can do is to go into debt in order to pay for these luxuries, quite opposite of what a passive income investor should do. Like the wealthy and financially educated, the cash flow investor builds up their asset column first. After they have obtained enough cash flow every month, then they are free to start buying these luxuries. That is why it is important to know your financial priorities so that you can get wealthier over time after you have obtained these assets. If you want to learn more about what makes you poorer, read my blog post: Three Things That Keep 95% of People From Being Rich

Let me give you an example of how a smart and savvy passive income investor treats a luxury. Say that I really want to purchase a Mercedes Benz and that I have $70,000 in the bank. Instead of going to a dealership and buying a Benz using what I have in the bank, I will use that money for a down payment on a six unit residential building. With that apartment building, it will start throwing off cash flow every month (assuming that you purchased a good real estate deal and that it is properly managed). You can purchase a Mercedes Benz on a monthly payment plan and use the cash flow from that apartment building to start paying down the Mercedes. I find this a favorable situation because not only do you get the luxury you always wanted, you also get a cash flowing asset, an apartment building.

 

As you can see, the spending habits of a successful investor is all about the right priorities. If you like this article, please like it below through facebook.

 

Thanks

 

Sam

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