Lazy Money

If you are interested in money and finance, I’m sure you have seen a diagram like the one below. Robert Kiyosaki popularized the cash flow diagram.

If you have not seen this, the red line shows the cash flow of someone who will not get ahead because most of their income goes straight out of their pocket due to their expenses. This represents the people who are poor.

The thin black line, represent the middle income group, who buys liabilities (like cars, boats and anything that need financing) with the income they earned. Because of their liabilities which sucks up their income, they don’t own much assets that generate income.

The thick line shows the cash flow of the rich. From their income, they buy assets that generate more income, and then only spend their money. Therefore they create passive income streams. That’s the idea behing buying income generating assets.

Although the diagram shows how a person manages their cash flow, I think there is another diagram. It is not show here but it represent a person who have assets but it is not spent, or is it being invested.

These are people have money in low yielding assets like fixed deposit certificates or even cash in savings account. I call these lazy money because they are not doing much to help you get ahead financially. I suggest that you check if you have any lazy money hiding around. It is time to get them to work.

Related Articles:

Cash Flow vs Net Worth
How Much Do You Save?
Net Asset Value
Money Relationship