Finance Tip #12: Cash Flow vs. Net Worth

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Many nurse practitioner entrepreneurs become focused on building a high net worth, but is this really what you should be focusing on? In my opinion, focusing on CASH FLOW is much more important.

If you do not know what your net worth is, then you really should figure that out first. This was discussed in Finance Tip #10 just for your information.

Knowing your net worth is important, but your net worth is really not that important if you do not have income. What do I mean by this? I mean if you have a house that has $500,000 in equity and a 401k that has $500,000 in it (yes, you are technically a millionaire) but if you lose your job, where are you going to get money to survive day to day? (I hope you have an emergency fund!) Your house and your 401k are worth a $1,000,000 yes, but they are not producing an INCOME for you. There is a big difference. Sure, you could sell the house if times got tough, but who wants to do that?

This is why I want you to start focusing on CASH FLOWING assets instead of just how much you are “worth.” How much you are “worth” means nothing if you have no income coming in. Therefore, CASH FLOW is everything.

Income = money you can use to invest.

Income = money you can use to leverage GOOD DEBT to increase your wealth.

Income = money to survive and to pay bills with.

Equity locked up in your home = nothing unless you sell it.

There are a lot of “millionaires” out there because of the positive equity in their home, but they are still living paycheck to paycheck because they have little cash flow in their life. This is why I talk about multiple income streams in my articles and why it is a foundational concept within The Elite Nurse Practitioner Model.

Every nurse practitioner needs to build multiple cash flowing assets by creating 1-3 businesses/practices, having rental/vacation properties that generate a monthly profit, and by purchasing dividend paying stocks. Doing this will increase your cash flow and increase your financial redundancy which will ultimately lead to your financial independence!

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