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Cash Flow is King

The Good Life is a cash flow positive life.

“Happiness is positive cash flow” — Fred Adler

When companies are cash flow positive — when cash inflows are more than cash outflows — they can do nearly anything.

When those same companies are cash flow negative, they are in survival mode 24/7.

In this way, it is helpful to think of cash flow as freedom. Companies either have it or do not. There is no grey space for interpretation.

The effects of negative cash flow are legion. They include poor performance, limited strategic action, and chaotic person-through-team focus.

Negative cash flow is the debt bomb that levels cities. It sucks.

Positive cash flow, on the other hand, is liberating. With it, companies can take a moment to zoom out, imagine a brighter future, and develop a strategy to transform vision into reality.

Paul Graham calls positive cash flow “default alive” and negative cash flow “default dead.” That’s about right.

This concept is personal too.

Spending more than you make is more than foolish. It is life-destroying.

It creates enormous stress — leading to mental and physical health problems — and dramatically limits choices (and personal freedom).

Try to measure cash flow day to day. Did you take in more than you made on, say, Wednesday?

The Good Life is a cash flow positive life.