Step 8 - Capital
Currently, most of your time and life energy are probably being spent on earning income. In Step 7 we started thinking about maintaining a job for only a “finite amount of time.” Through maximizing income and minimizing expenses, an exciting thing starts to happen on your wall chart. When your expense line falls below your income line, an interesting space develops – in Chris’ chart (below) we’ve colored it yellow.
This is savings. You can also call it “capital” – because in Step 8 this money is invested to create income. When you do that you are using your money to make more money.
In Chris’ chart (above) you’ll notice that since September her employment income has remained greater than expenses and the space between the two (shown in yellow) is increasing. She is no longer accumulating debt, no longer using credit cards to cover the expenses that exceed her income – she is building savings. If she invests those savings in high-interest or dividend-bearing accounts, she will be creating investment income.
In Chris’ chart (above) you’ll notice that since September her employment income has remained greater than expenses and the space between the two (shown in yellow) is increasing. She is no longer accumulating debt, no longer using credit cards to cover the expenses that exceed her income – she is building savings. If she invests those savings in high-interest or dividend-bearing accounts, she will be creating investment income.