Cash flow and net worth are both financial metrics, but they measure different things. Net worth is the sum of your assets minus the sum of your debts. Having a high net worth does not ensure a high cash flow. Cash flow is the more important metric and measures the money coming in versus out each month. This is what matters when becoming financially independent. If you have a high net worth, but also high expenses each month, you still are stuck in the rat race.
- Net worth is simply your assets minus your liabilities but net worth doesn’t tell the whole story when it comes to financial freedom.
- Cash flow tends to be more important because it allows you to exceed your expenses and also gives you an indicator of how financially free you are.
- Cash flow is not something that is always consistent. The more money you have coming in, the more free you are.
“The number one question that Brad, Ryan, and Jimmy get asked is the topic of this week’s episode”