In this episode of Invest In You Podcast, Fredrik and Charlie discuss Cash Flow. You have to take note of your income and your expenses. Be it in business or in your personal lives. It is best that you know where your cash is going or where it is disappearing to. You can do this manually or easily? have a bank to monitor all the cash flows of your personal or business life.
A lot of things are considered so you will have a smooth cash flow. It is best to earn money and save on the expenses. With the right advice, you will be on the right track. More pieces of advice on cash flow on this episode, so stay tuned.
KEY TAKEAWAYS
Cash Flow. What are your incomes? What are your expenses? You can put that on paper or have the bank do it. So you will know where all the money disappeared. You can also do this manually. Cash flow is the one that goes out every month.
Working for investing in assets vs. working for a salary. Fredrik tries to work mainly for creating assets, for spending most of his time either refining assets, working on how he can make the best out existing assets and building very much for the long haul. He does not make the most money from his salary. He can guarantee that his salary is lower than most of the audience.
Cash flow aspirations. Cash flow dream is around 100,000 pounds.
Business Cash Flow. If you make it in the business, you can spend money before. That could make a huge difference. It is after tax. Matching income with expenses and the reason why most businesses go out of business is they don't have enough sales. Business failure has got to do with the management of cash flow.
Financially free. You don’t have to work but you get yours. If you strip out the things which cost you a lot in your daily life, you get rid of expensive debt, you tidy up amongst us expenses and all of a sudden you might have yourself a financial freedom number which is linked to a cash flow. When you are financially free, you have more.
External help. It is really hard to challenge ourselves. We need to have external help. Someone gets to hold up the mirror to be the accountability portion especially when it comes to setting up a new direction. Someone to help makes us everything from the planning to the follow-up and so on and so forth and we're still talking about cash flow money coming in and out all the business.
Mentor or Friend. The mentor, he or she can help out because they have been there done that and got the t-shirt. A friend, it depends on the quality of the front. They must be direct and challenging enough, to make it a stretch to do the tough choices. Help you to say that actually if you carry on what you're doing, you will fail. It is important to know how qualified your friend is.
Individual Cash Flow. It is quite the same as business cash flow, but it is even more granular, how you spend your money in your household.
Good debt vs. Bad Debt. A credit card is a temptation for us to overspend. Credit cards are carrying a high interest which means that not only do you need to pay back your debt, you need to pay more. Payday loans, these are horrible for your cash flow. You not only have to pay the principal, but you might also have to pay even more as an interest.
Owning a house. So, therefore, if you do have a home, that usually means that you have a negative cash flow for your home where else rented or you own it. If you got maintenance on it or not as usual as a big fat - usually. Unless you have a lodger, you will earn by having it rented. If you have a couple of events in the house, you can also earn money. If you have a theatre, you can actually sell tickets. Or fly some people from other people to have training in your house. Or rent it to someone getting married. So, cash flow is great to rent.
Combining cash flow and privately. All of Fredrik's car travel, all the travel back in 14 different countries that took a lot of, that is pure business. It is like pretty tax money. Many times no means it's a massive saving, so you might remember when we start this conversation like a dream for many people would be to make like £100,000. How many other people who make £100,000 they actually get 50,000, so therefore you can live for much £50,000 and live a style much easier by allowing the business to pay for all those things.
Make more money from the accountant’s money than you actually pay them. They should be able to give you tax advice worth more than their face.
Rich problems. The need to have financial advisors because they have so much money to invest. The kids must be spoilt too, so they spend a lot of money on them. The whole family lifestyle, etc.
Poor problems. If you're poor you don't have too much. It is a huge problem not to have enough. Income is another problem. Then finding the right advice is another one. You're not so well off. You're usually in a job working for a salary or you're self-employed. For whatever reason, that usually means that you are not really optimizing the tax. You're usually ending up having to pay a lot of money. When you retire, your money diminishes your savings decreases. It is probable that you will go from poor to worst. That's a good idea to invest in your knowledge so that you can get out of a situation.
Best advice. If you are in business, try to invoice really really early or even better get paid before you lived on the job. Selling a merchandise. Sell before you even have the product. Credit cards, it would be best to pay them early before they are due before you go into any kind of fees.
BEST MOMENTS
“We are not the best person to set goals for ourselves. We often need to be challenged.”
“If you think we can, if you think we can’t, either way, you’re right.”
“A lot of things are possible basically. So you can actually use your home for a lot of other income activities assuming that you own it yourself. There are some restrictions if you're renting it because often the landlord will have some ideas and thoughts, how he how you may or may not use the house of course.”
“Don’t own your home, rent it.”
“If you pay a really good accountant, they know more tax rules you, therefore, get more tax benefits.”
“The more money you can usually make, you have all of a sudden unlocked a whole level of different investments which does require a high level of financial IQ. So unless you like to lose big, then you need to know a lot or we need to have lots of good advice as to help you. And if you don't know what those pieces of advice are, it will cost you a fortune as well.”
ABOUT THE HOSTS
Serial entrepreneurs Fredrik, Charlie and Ivan Sandvall love sharing ideas and interviewing world-class entrepreneurs and influencers. Invest in You is about investments, entrepreneurship personal development and doing fun things. They hope to inspire you to take action, helping others and yourself plus enjoying the journey we call life.
CONTACT METHOD
Fredrik Sandvall
fredriksandvall.com
linkedin.com/in/sandvall/
https://www.facebook.com/FredrikinLondon/
@FredrikinLondon
Invest In You Facebook Page https://www.facebook.com/groups/1nvestinyou/
Charlie’s Youtube Channel: https://www.youtube.com/channel/UCRYA8B8P29M-OzUrpfiP5Iw
