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Sound Financial Group - Bothell, Washington


SFB026 Why Cashflow Beats Rate of Return

| July 26, 2016
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Episode Summary

Paul Adams dives into a more complex topic this week and talks about the differences between cashflow and rate of return. This podcast episode involves video to help the audience better understand these concepts. Paul shows what the 'living balance sheet' looks like and how it can be applied to your specific scenario. Investment firms might talk or heavily market rate of return, but Paul emphasizes not to pay attention to the hot financial topic of the week. Instead, focus on how you spend your money on a daily basis and build a strategy around that.

What Was Covered

  • 01:00 - Ensure to check out the video version of this episode, as Paul will be going into something a bit more complex than usual.
  • 01:30 - The way you build wealth is with your spending, not with your investing.
  • 01:35 - The way you control household cashflow makes all the difference in the world.
  • 01:55 - Join our newsletter and get some great updates.
  • 03:25 - Are you designing your financial future or just leaving it up to chance?
  • 04:05 - Savings and investing goes hand in hand. It's not an either/or situation.
  • 04:25 - Most financial industries talk about rate of return, not cashflow.
  • 05:05 - Don't pay attention to the hot financial topics that's being sold in magazines/on the web. Understand your strategy instead.
  • 05:15 - Paul shows his 'living balance sheet' on video and does a demonstration of how it works.
  • 10:35 - If you're not aware of how your money is working for you, a lot of your hard-earned money can end up in other people's hands.
  • 18:34 - You do not have to take more risk to put more money on your balance sheet.
  • 23:15 - Most of us are trapped in a consumer mindset.
  • 24:10 - Paul talks about Mr. Money Mustache.
  • 24:45 - If you're saving 5% of your income a year, it's going to take 66 years to have enough money to retire.
  • 27:20 - It will take work to save more money, but it will also take you longer to get out of the workforce if you don't have an active savings plan. Choice is yours.
  • 27:50 - You can control your destiny by controlling your spending.
  • 28:25 - Would you change your spending if you could get 39 years of your life back?
  • 29:00 - Read Mr. Money Mustache's blog.
  • 30:35 - Read the book Stop Acting Rich.


"The way you build wealth is with your spending, not with your investing."

"We do everything we can to help educate people more about money, because people become better clients that way."

"Be sure to save 20%."

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Episode Disclaimer

Links/references to external sites (Mike&Lauren, Mr. Money Moustache, Stop Acting Rich) are provided for your convenience in locating related information and services. Guardian, its subsidiaries, agents, and employees expressly disclaim any responsibility for and do not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof.

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