Your Freedom Generator. It’s the powerful machine that gives you a life free from financial fear. So what is it? How does it work? And why is it important?
Today we kick off a six-part intensive series on the Freedom Generator. We’ll cover the operation of each of the five components and how they work in tandem to get you to Financial Freedom and sustain you once you achieve it.
What Is A Freedom Generator?
Simply put, a Freedom Generator is an investment machine that you construct in order to pay you a consistent, livable income. Fully built, your Freedom Generator frees you from the need to exchange your time for money, your salary. It puts your money—not you—to work in generating the cash flow that you need.
Building your Freedom Generator is all about winning the Game of Money. You send your money out to work for you until it produces enough cash flow to sustain your lifestyle. Then you’ve reached Financial Freedom!
What Does The Freedom Generator Look Like?
Ready to see the five buckets that make up the Freedom Generator? Here’s an illustration of the whole system:
This diagram highlights each of the five money buckets–Cash Bucket, Income Generator, Growth Engine, Lifestyle Bucket and Charity Bucket.
The green arrows represent the directions in which cash flows. And the blue vertical line separates the two main parts of your Freedom Generator:
- On the left are the elements that will collect, store, grow and dispense your money.
- On the right are the elements that support your physical assets and philanthropic efforts.
Now let’s get into a quick overview of each component. Remember, we’ll cover each bucket in depth as we go through this series!
The Cash Bucket
The Cash Bucket plays two roles.
While you’re building your Freedom Generator, this bucket acts as your Safety Net. The Cash Bucket holds the money in your Pay Yourself First account in a liquid state so you can access it in case of financial emergency.
Once you reach Financial Freedom and switch on your Freedom Generator, your Cash Bucket transforms into the pipeline for the income that your Freedom Generator pays you. It funnels money into your Perfect Account Structure to cover your regular expenses, bills, future goals and more.
The Income Generator
The Income Generator is the mechanism by which you send your money out to work and is the true powerhouse in your Freedom Generator.
While your Freedom Generator is under construction, your goal is to build up your Income Generator as quickly as possible. Here, you invest in quality assets and then reinvest your returns to build your Income Generator that much faster.
Once you turn on your Freedom Generator, your Income Generator provides a steady flow of money to your Cash Bucket that will completely cover your lifestyle expenses.
The Growth Engine
The Growth Engine is your retirement account. But who wants to wait until retirement to be Financially Free?
But while the Growth Engine plays an important role in supporting your lifestyle later in life, it’s not your primary focus until you’re within a few years of retirement age. Before that point, you’re dedicated to building up your Income Generator rather than your Growth Engine.
The Lifestyle Bucket
The Lifestyle Bucket is where you keep the physical items that have value and support your everyday life. So think about possessions like your home, your car, your valuables and more.
The Lifestyle Bucket tends to be a money drain. This bucket can suck up your cash, put you into long-term debt and keep you from creating Cash Flow. For that reason, our motto for this bucket is to Live Within Your Means and stay out of debt. By following those rules, you can ramp up construction of your Income Generator.
The Charity Bucket
The Charity Bucket is an optional bucket in your Freedom Generator.
If there are causes to which you want to give financially and to which you want to leave a legacy, the Charity Bucket sets you up to do just that. You’ll fill this bucket with cash-producing investments that provide consistent donations to your favorite charities, even beyond the term of your life.
So What’s Next?
Over the next few months, we’ll dive deep into each of these five buckets, answering your questions and making you an expert in the Freedom Generator. You’ll get a firm grasp on what it is, how it works and—most importantly—how to set yours up for success!
Stay tuned for the next post in our Freedom Generator series in which we’ll talk all about the Cash Bucket.
Can’t wait to learn more about building your Freedom Generator? Join Financially Fit Bootcamp to get a master class in how to start construction on yours today!
image credit: Bigstock/schnaps
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.