As water is essential to the human body, income is essential to Financial Security and Prosperity. Like water, income flows into our lives and out of our lives. Water flowing and moving keeps it clear, keeps it oxygenated, keeps it full of life. Income flowing through our lives has much of the same effect. Anyone who has lost their income or their access to water can attest how quickly our lives can devolve. Whenever water, or income is stagnant, things quickly become murky.
The Role of Income
One of the things we teach our clients is that while we are working, our lives are driven by income; after we are done working and retired, our lives are still driven by income.
Types of Income
There are many different types of income and ways to categorize it, but generally, we think of income broadly as:
- Earned Income: Salaries, business income, income that requires you to directly work to earn it.
- Unearned Income: Investment income, rental income, things that do not require your direct continual effort to earn.
Philosophies and Emotions Surrounding Income
Everything is driven by income. The work you choose and the negotiations you conduct regarding your income are essential for creating financial security and prosperity. Different philosophies exist regarding income: some believe in following passions regardless of income (like the starving artist), while others prioritize financial gain above all else. The key question is whether your income allows you to achieve your definition of financial security and prosperity.
Evaluating Your Path
One of the greatest assets you own is your ability to generate income. How much time have you spent charting your path forward in relation to income? Have you evaluated your chosen path, and does it lend itself to living the life you desire? Does your income own your life, or do you own your income? Your answers to these questions will significantly impact your financial outcomes.
The Golden Goose
An analogy we often use is that of a golden goose that lays 14-karat golden eggs. If you truly owned one of these, you would go to great lengths to protect, nourish, and love it. You are that golden goose. Are you honoring yourself in the same way you would if you owned a golden goose?
Planning for Retirement Income
Regardless of how well you protect, nourish, and love yourself, there will come a time when you might be unable to generate income. Just as it is essential to plan for your income while working, it is equally important to plan for how your income will flow once you are retired.
The 5th Option by Walter C. Young III and Peter G. Bielagus gives a beautiful analogy comparing barrels of water to a continuous water source. More barrels of water can never quite quench your thirst for security. However, having an artisan well that flows consistently can provide lasting reassurance. Similarly, having a steady income stream is more desirable and sustainable than relying on finite resources.
Without a steady income flow, financial security and prosperity are at risk. For this reason, income is our number one cornerstone for building a foundation of financial security and prosperity.