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I spend a decent amount of time on Twitter. I’m mainly a lurker, but I follow many finance, business, tech, and real estate content creators and outlets. If you’re not on there, I suggest you join even if you have nothing to say. There’s a lot of free, thought-provoking content on there and even I learn something usually every day.

However, social media isn’t always the most glamorous. Cold Takes. Dumb Advice. Flat out Lies. Grifters. One thing all these groups have in common is that they love to share their numbers. Attention is the currency of these sites, much like the local news (have you ever heard of the saying “if it bleeds, it leads”?) It’s growth by any means necessary. It’s idealizing everything you’ve ever done and stretching it a little bit more.

I get it, social media is a game, the creators want to build their audience and try to sell their followers on some sort of idea or product, be it a course, newsletter (sound familiar?), way of thinking, etc. They use the following two things the most often.

- Net worth or amount of $ they own in real estate or share of business.

- How much they do in revenue.

This literally means NOTHING to me. (I’m looking at you CNBC Make It articles and you real estate people)

What’s the number that really matters?

The cash flow numbers. How much money are these individuals consistently bringing in on a continuous basis? Yes, nothing is guaranteed or continuous really, and even you can lose your stable paycheck job. What I mean is how much money can you safely say you can consistently bring in each month throughout all your income sources?

Are you a HENRY? (High income, not rich yet) These people are cash flowing big time, likely saving, paying off debt, and investing all in one. Their net worths are likely negative. Big time. But it doesn’t matter. People who just got out of med/law school or went to a M7 MBA likely have a net worth issue. But not a cash flow issue.

One Thing May Lead to Another

Yes, high net worth folks can cash flow more, be it from larger business, real estate, investments, high paying job, whatever. It’s easier when here. But it’s not the only thing that matters.

I see this a lot in the FIRE (financial independence, retire early) community. Hit a specific multiple of your annual expenses in savings and you can retire. But what are those savings in? Liquid investments? Illiquid investments? Is owning 5 Airbnb’s going to bring you happiness and prosperity and liquidity? Maybe. Not liquidity though. Do what works for you.

Are you suggesting that I go buy an Annuity?

Nah, fam. Avoid that. The main point here is that net worth is often used in financial metric tracking apps, people gloating online for your attention to see how their doing, but it fails to look at the bigger picture. You could be worth a lot of money and be negative cash flowing. Not ideal! I don’t care if Jimmy owns $1 million in real estate if he’s only cash flowing $1000 a month after everything. I don’t care if your revenue is $500k and your net income is $10k.

Like Optimus Prime once said, there’s more to them, than meets the eye here.

Would you want $1 million in an asset that was highly illiquid and not cash flowing? Probably not. You’d want that somewhere else.

Want to try tracking your Cash Flow? I’ve developed a spreadsheet-based tool that works great manually, by dropping in your CSVs, or utilizing a service like Tiller. (I’m using tiller with my spreadsheet right now and it’s glorious.)

Stay frosty out there,

Andrew

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