The biggest issue when it comes to cash flow is that people lack direction, they don't know where to go or what to do. When people don't know what to do, they do nothing.

In my 9 years of experience in the finance industry, I’ve spent most of my time reading people's credit reports, pay stubs, w2’s, tax returns, bank statements, investment accounts, retirement accounts, and virtually every aspect of the most intimate details of their finances. Overtime, I’ve noticed a couple of things. People generally have little to no clue as to what they’re doing with their finances but for the most part, they all seem to want to improve their financial situation.

The number one thing people try to do to increase their cash flow is budget and save. Don’t get me wrong this is something everyone MUST do. In fact, I believe everyone should audit their finances like a big corporation would. However, there’s a limit to budgeting and saving. 

Let’s just say you magically get rid of all your debt and the only outgoing expenses you had were your minimum basic bills for necessities. You can’t cut anything else out of your finances unless you plan not to eat or put a roof over your head. So, if your only strategy to increase cash flow is to save or cut out expenses, you’re out of luck. 

Remember, the 80/20 rule states that 80% of your results come from only 20% of your actions. So it stands to reason that you should continue to focus on finding the 20% of things that make the most difference in your finances. Continually finding the things that will give you the greatest return on your efforts.

I believe that in finance, cash flow is one of those things. And the focus with cash flow should be on MAKING more money because unlike budgeting and saving, there is virtually no limit to how high you can go. I’m not talking about getting a raise at your job. That has a huge cap because not only will your employer only be willing to pay you a certain amount, but you’re capped at how many hours you can work. Also, we tend to spend what we make so I’ve rarely seen that make a huge impact on people’s finances.

My mentor taught me, “Work full time on your job and part time on your fortune. Because soon you’ll be able to work full time on your fortune.” What I’ve learned is that it doesn’t take very much money to completely change a person’s lifestyle. 

An extra thousand a month part time can radically change someone’s life. An extra thousand a month can get them out of debt. An extra thousand a month can give them some power to invest and significantly increase their cash flow. An extra thousand a month can give them the ability to taste the power of compounding their money. An extra thousand a month can give them the down payment they need for their dream home or to begin investing in real estate.

It’s not complicated, to make an extra thousand a month you simply have to find something to sell on the side. Sales has virtually no cap because you can use the internet to start making sales very quickly from the comfort of your home. The best part is that anyone can do this with little to no out of pocket expenses and there is virtually no limit to who you can reach and sell to.

However there are 2 major problems in this approach. 

First off, we as a society have developed a lazy and entitled mentality. So this causes people to either not want to do anything about it, complain, and hope the government solves their problems... Or they try to look for a shortcut like the lottery or some other “easier” or “faster” opportunity. This inevitably has them fall for these scammers and schemes that promise you, “the easiest way, the fastest way” to get rich.  

Secondly, for those of us who do want to find an opportunity, lucky for us we live in a country where we are definitely not short on opportunities. However, this tends to be a double edged sword. When we are faced with endless options and opportunities, it tends to paralyze and overwhelm us. We don’t know what to do. And what do we do when we don’t know what to do??? We do nothing. 

To solve the first of these issues, it’s crucial to make peace with one of two facts:

Number one is the fact that once you choose a path to increase your cash flow, it will require work. Stop believing these marketers when they say, “It’s fast, it’s easy, and anyone with a pulse can do it!” It’s going to take work and there’s really no way around it.

Number two is that if you’re not willing to work hard to escape your current situation, you'll have to live stressed about your finances for the rest of your natural life. Make peace with the fact that your finances will never change and will gradually get worse, because as you age it will only get harder and harder.

To solve the second problem, If you do choose to work, remember the 80/20 rule. Find something that will give you the greatest rate of return for the work you’re willing to put in, and ideally something you can enjoy at the same time. I find that people work harder when they enjoy what they do, and the byproduct of working harder will simply result in increased productivity and increased cash flow. 

Take charge of your life. Don’t wait for some politician or for the winning lottery ticket to change your finances, chances are neither of those will ever happen.