Hi this is Diane Kennedy. Today is Day 15 of the 30-day Coundown to the release of my new book, The Maui Millionaires™ that I co-wrote the book with David Finkel. The book is scheduled to be released on November 3, 2006, and from now until then I’ll be checking in every day with a Wealth Tip excerpt from the book, written either by myself or by my co-author, David Finkel.
Wealth Tip 15: To Become Financially Free you need Passive, Residual Income. Active Business Cash Flow or Passive Income is NOT Enough
I became a millionaire at age 32, but I wasn’t financially free until a few years later. It’s not enough to make a million dollars or more per year of income. You are not financially free until you have the passive, residual cash flow and net worth to support your lifestyle for the rest of your life.
Looking back, one of the biggest financial mistakes I made was thinking that the seven figure business income I had created would last forever. Because when I sold my business, while I did get a nice fat wire transfer, but the cash flow from the business went to the new owner. It was at that point I realized that I needed residual income streams that were independent of my having to work to truly be financially free. That changed my investing focus (which up until that point hadn’t been on investing for cash flow but rather on investing for maximum equity growth).
I want you to learn from my mistake. When you begin to accumulate a significant net worth as a Level Two wealth builder, make sure you shift a real portion of your financial energy to generate passive, residual income as a Level Three wealth builder.
For more on the three types of cash flow and creating passive income see The Maui Millionaires™ pp. 167-190.