Mastering the Flow of Wealth

When it comes to money we're constantly bombarded with static numbers: net worth, account balances, investment valuations. It's easy to get fixated on these snapshots in time, but true wealth isn't a destination, it's a journey. It's about flow, it's about movement, it's about flux.

If you've ever studied physics or engineering, you've probably encountered the term "flux." In those fields, flux describes the rate of flow of a quantity through a given area or volume. Picture a river: the faster the water flows, the higher the flux. Or imagine heat radiating from a fire: the more intense the heat, the greater the heat flux.

Flux is used to quantify the flow of various quantities in transport phenomena, including heat, mass and momentum. Electricity and magnetism are measured in terms of rates of change and flux.

But what does this have to do with building wealth?

Everything.

Just like a river's current or the heat from a flame, your financial life is in constant motion. Money flows in through your income, flows out through your expenses, flows into investments, and sometimes even flows back out. Your net worth – that snapshot we often focus on – is simply the accumulation of all these flows over time.

In this article I am going to explain my take on flux and explore how you can harness its power to transform your financial life. We'll look at two key types of financial flux:

• Cash Flow Flux: The rate at which money moves in and out of your accounts. Think of it as the pulse of your financial system.

• Net Worth Flux: The overall change in your net worth over time. This is the big picture view of your financial health, and it is driven by cash flow flux.

By the time you're done reading, you'll have a whole new perspective on wealth building – one that embraces change, optimizes flow, and empowers you to take control of your financial destiny.

So buckle up, because we're about to embark on a journey into the exciting world of flux and finance.

Cash Flow Flux: The Pulse of Your Finances

Cash flow is the lifeblood of any financial system. It's the difference between your income and expenses, the net amount of money flowing in and out of your accounts. A positive cash flow means you're bringing in more than you're spending, while a negative cash flow means the opposite. But it's not just the magnitude of your cash flow that matters, it's the flux – the rate at which it changes.

Think of it like your heartbeat.

A healthy heart doesn't just beat, it beats at a consistent rhythm. Similarly, a healthy financial system doesn't just have positive cash flow, it has a steady and predictable cash flow flux. This means that income is flowing in consistently, expenses are under control, and there are no major surprises or disruptions.

Tracking your cash flow flux is essential for understanding your financial health. There are many tools and methods you can use, from simple spreadsheets to sophisticated budgeting apps. The key is to focus on both the magnitude and direction of your cash flow.

• How much money is coming in?

• How much is going out?

• Are there any patterns or trends you can identify?

Most of my friends are successful; they discovered budgeting and spending awareness long ago.. but every once in a while I make a new friend who never learned the power of order.

Once you understand your cash flow flux, you can start to optimize it. You can only hit a target you can see. This might involve increasing your income through a raise, a side hustle, or a career change. It might also involve reducing your expenses by cutting back on unnecessary spending or finding ways to save on essentials. The goal is to create a consistent positive cash flow flux, where you're consistently bringing in more than you're spending AND increasing the rate of income growth.

Net Worth Flux: The Bigger Picture

While cash flow is the day-to-day pulse of your finances, net worth is the big-picture view. It's the total value of your assets (what you own) minus your liabilities (what you owe). A growing net worth is the ultimate sign of financial health and progress towards your wealth-building goals.

Just like cash flow, net worth isn't static. It fluctuates over time due to a variety of factors, such as investment returns, changes in property values, and debt.

This fluctuation is what we call net worth flux.

Tracking the changes to your net worth flux is essential for understanding your long-term financial progress. You should aim to assess your net worth at least annually, if not more frequently. I have a weekly process + a monthly series of calls and meetings with partners, portfolio companies, suppliers and other technologists. This involves taking stock of all your assets and liabilities, including cash, investments, real estate, vehicles, debts, and mortgages. It's important to account for any appreciation or depreciation of your assets, as well as any major life events that might impact your net worth, such as buying a home or starting a business.

Once you understand your net worth dynamics you can start to influence them. This might involve investing in assets that have the potential to appreciate over time, such as stocks, real estate, or your own business. It might also involve paying down debt or avoiding high-interest loans that can erode your net worth. The goal is to create a positive net worth flux, where your net worth is consistently growing over time.

Embracing Flux: The Key to Financial Success

In the world of flux and finance, change is the only constant. Your income will fluctuate, your expenses will vary, your investments will rise and fall, and even your mindset will evolve over time. The key to financial success is not to resist this change, but to embrace it.

By understanding and managing the different types of flux in your financial life, you can take control of your financial destiny and build lasting wealth. Remember, wealth isn't a destination, it's a journey. And like any journey, it's all about the flux.

In this piece we've journeyed through the dynamic currents of financial flux. We've seen how it shapes our cash flow, the ebb and flow of our daily financial lives, and our net worth, the cumulative result of our financial choices over time. But remember, flux extends beyond these core elements. It's in the pulse of the markets, the shifting sands of tax laws, and even within the winds of our own mindsets.

If there's one takeaway I want to leave you with, it's this: Wealth isn't a static destination, it's a dynamic process. It's not about reaching a certain number and then coasting. It's about understanding and harnessing the power of flux to create a continuous flow of abundance.

You have the power to be the architect of your financial destiny. By becoming an active manager of your financial flows, you can optimize your cash flow, accelerate your net worth growth, and navigate the ever-expanding horizon of wealth building.

Think of your cash flow as a series of interconnected pipelines. By identifying and fixing leaks, you can ensure that more money stays in your system, fueling your financial goals. And by creating multiple streams of income, you can diversify your flow and create a more resilient financial foundation.

But the true magic happens when you leverage systems to amplify your efforts.

Just as a small dam can harness the power of a river to generate electricity, smart systems can multiply the impact of your cash flow and accelerate your net worth growth. This might involve automating your investments, implementing tax-efficient strategies, or building a business that generates passive income.

By aligning your actions with the principles of flux, you can create positive dynamics that ripple through your financial life.

A well-managed cash flow can lead to increased savings, which can then be invested to generate even more income. This positive feedback loop can propel your net worth to new heights over time.

Of course, flux isn't always positive. There will be times when your income drops, your expenses rise, or your investments take a hit. But by embracing the concept of flux, you can learn to adapt to these challenges and even use them to your advantage. A market downturn can be an opportunity to buy assets at a discount, while a temporary loss of income can be a catalyst for finding new and better opportunities.

Remember, the key is to stay flexible, adaptable, and always open to learning. The financial landscape is constantly evolving, and what works today might not work tomorrow. By staying curious and informed, you can stay ahead of the curve and continue to optimize your financial flows.

As someone who's built a career around building systems and investing in technology, I've seen firsthand the power of flux to transform lives. Whether it's the rapid growth of a startup or the exponential returns of a well-managed portfolio, flux is the engine that drives wealth creation.

But flux is not just about money. It's about mindset, about energy, about the flow of ideas and opportunities. By cultivating a mindset of abundance, you open yourself up to the infinite possibilities that the universe has to offer.

So, I encourage you to embrace the concept of flux and make it a part of your financial philosophy. Learn to manage your flows, leverage systems, and adapt to change. And most importantly, never stop learning and growing.

👋 Thank you for reading Wealth Systems. I started this in November 2023 to share the systems, technology, and mindsets that I encountered on Wall Street.

💡The BIG IDEA is share practical knowledge that can be applied toward the development and refinement of wealth building systems.

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