Financial Security is about sustainability. If you have a deep sense that things are not only secure now, but that they will be going forward. That doesn't mean you can live frivolously, but you don't need to panic. You can plan. You can build. You can live.
In order to build Financial Security, you may have a period of time where the 'Outs are bigger than the Ins'. Either this is external bleeding and needs immediate and decisive First Aid, or it may be investing. A Runway is how long you have to build if your Ins are Bigger than your outs. It is a form of a Buffer when you aren't living within your means.
Normally I think of a Buffer as something to smooth the bumps of life. To allow for the expected-unexpected events, and even some of the unexpected-unexpected ones.
If you have a Base that is independent of you, and doesn't require you to be a "productive asset"... then you have an unlimited Runway. You can invest deeply in Research and Development. You can build a really secure competitive advantage, because most people can't afford that sort of stress-free "time out". The same way some people can invest in University Education, while others need to go out and get a job immediately.
But if you are living above your Baseline, then your Runway has a time limit. A period after which some tough decisions will need to be made. Financial Planning, like exercise or dieting, doesn't require you to believe in it in order to have an impact on your life.
In order to build Financial Security, you may have a period of time where the 'Outs are bigger than the Ins'. Either this is external bleeding and needs immediate and decisive First Aid, or it may be investing. A Runway is how long you have to build if your Ins are Bigger than your outs. It is a form of a Buffer when you aren't living within your means.
Normally I think of a Buffer as something to smooth the bumps of life. To allow for the expected-unexpected events, and even some of the unexpected-unexpected ones.
If you have a Base that is independent of you, and doesn't require you to be a "productive asset"... then you have an unlimited Runway. You can invest deeply in Research and Development. You can build a really secure competitive advantage, because most people can't afford that sort of stress-free "time out". The same way some people can invest in University Education, while others need to go out and get a job immediately.
But if you are living above your Baseline, then your Runway has a time limit. A period after which some tough decisions will need to be made. Financial Planning, like exercise or dieting, doesn't require you to believe in it in order to have an impact on your life.
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