Top o’ the Mornin’ to Ya!
TLDR: Discover the two main ways your money can work for you – portfolio income and cashflow income – and why teaching your kids these concepts builds generational financial freedom beyond just saving.
What?
Does your money actually do work for you? Two days ago we talked about financial literate kids, and one of the things we want them to become literate about is money doing the work for us. Having that money actually work. According to Robert Kiyosaki, there’s two main ways you can have money work for you.
One is portfolio, and one is cashflow. Portfolio, that’s the main way I have money working for me right now. I trade stocks and options and foreign exchanges, and I make some money that way. Of course, the last two weeks has been going downhill, but it’s over the long haul and having the right practices in place. So that’s portfolio income.
The other income is the cashflow income or “passive” income. That’s having a piece of software that people pay for on a regular basis. It’s having a book – well, not really a book. It could be a book. It’s more like something that gets paid for on a regular basis. That’s cashflow. A book system selling the books and distributing the books and having all that in place. So many people write a book thinking they’re going to make money from it and they don’t because it’s all the systems in place to sell the book and get the book out and lead to other products and services.
A business is a cashflow way to make money. Investing in a business. Real estate is Robert Kiyosaki’s favorite way of looking at cashflow income. Getting your cash to actually do the work for you. You can make more cash, but you can’t make more time. So you need to find ways to create value with money and make it work for you. That way you can give more, create more, provide more, love more, serve more, and just be more abundant and fruitful.
As we think about our kids and their money in this situation, we want to be looking at getting them – we said the jars are good up to about nine, we still use them after that – but we want to add the concepts of “passive” income, cashflow income, and portfolio income or investing that money to grow more.
One of the ways to initially do that, and you can even start this younger, is to throw interest in on the save jar to encourage them to save. My first adult financial literacy growth was saving some money just to save it and then starting to invest it and getting some return from it. But it became higher level when saving it for yourself and actually doing something bigger with it. Savings accounts and checking accounts don’t pay much interest. You really have to make a good investment decision, a good investment plan to get it all done.
Take that first money and give it to God. Take that second money and get it to building something for you–working money. And then that third money and fourth money is the spend and the save. The second money saving is to really build something up and the third money is saving for near future expenses – your next car insurance bill, the next house insurance bill, the things that come up that are bigger and over longer terms: roof replacement. And then the fourth money: living, the spending and giving more than your tithe and providing for your family abundantly and providing for the community and serving there.
Why?
I share this because Kingdom Family Leaders often teach kids to save but not to make money work for them. We stop at the three jars – give, save, spend – without taking the next step into portfolio and cashflow income. We’re raising kids who know how to not spend money, but not how to make money multiply.
You can make more cash, but you can’t make more time. When your money works for you through portfolio and cashflow income, you free up time to give more, create more, provide more, love more, serve more, and be more abundant and fruitful in Kingdom impact.
Lesson
The two paths for money working for you serve different purposes. Portfolio income – stocks, options, investments – requires active management but can grow wealth over time. Cashflow income – businesses, real estate, software, book systems – creates regular “passive” income that flows whether you work or not.
Most people write a book thinking they’ll make money from it. They don’t because the book itself isn’t cashflow – it’s the systems around the book that sell it, distribute it, and lead to other products and services. Same with any cashflow asset. It’s not the thing itself, it’s the system that makes it work.
For kids, start by adding interest to the save jar as inspiration. Let them see money growing without effort. Then introduce the concepts of portfolio and cashflow income as they mature. The progression: give first (tithe), build second (portfolio/cashflow), save third (future expenses), spend fourth (living abundantly).
Apply
This week, evaluate whether your money is working for you or just sitting. Identify one step toward either portfolio income (investing) or cashflow income (business, real estate, “passive” system). Add “interest” to kids’ save jars – match a percentage of what they save to teach them about money multiplication.
You be blessed!
