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Money Matters In the 21st Century

It’s a changed world.

We’re electronically connected.  So much so that governments have been toppled with tweets.  Vast numbers of us no longer do our work in an office, instead working virtually from wherever we need to be to get the job done.  Many of us no longer buy books or CDs or newspapers or even movies, instead, we download exactly what we want onto our phone, tablet, PC or TV.  Many of us even skip a trip to the mall, preferring to order online. 

We’re global.  The earthquake and tsunami in Japan slowed auto production and tv delivery into the US.  The upheaval of Middle Eastern political systems threatened US oil consumption which meant higher gas prices.  China tightly controls rare earth mineral mining, putting pressure on U.S. production of eco products.

We’re selective.  No longer do we buy a whole CD, no longer do we buy a whole newspaper.  We only get the podcast, article or song we really want.  We live where we want.  We wear what we want.  We read what we want. 

We’re inventive.   We’re instantaneous.  We have choices. 

Companies have changed.  Competitive challenge is greater than ever.  Economic pressures force operating decisions that result in painful outcomes.  Firms bypass domestic employees for far less costly offshore staffing and manufacturing.  Some firms have even changed their headquarters to foreign soil to avoid high corporate taxation.  Whole swaths of middle managers have simply become unnecessary. 

The employee-employer dynamic is altogether changed.  No longer does the employer take responsibility for each employee through retirement.  Today, we are responsible for all our retirement costs.  While some firms partially fund 401-k’s, there are few pension programs remaining other than for federal, state and local employees.

We’re personally responsible.  No longer can we count on cradle to grave employment packages.  No longer can we be absolutely sure our job will last even to the next decade.  In place, it’s up to us to not just figure out what we want and need in our lives, but also to make it happen.  That’s not just economics but also finding all the things in life that makes it a good life.  It is financial and it is personal.

It's a changed world.  Have we kept up?  Have you?  Have I?  Yes, we’re all connected.  Yes, we’re all electronic.  Yes, we’re now very selective about the things we choose to want.  Still, there are some deeper consequences to living in this changed world that are not as visible, not as talked about, not as easy to manage.

There are some basic 21st century rules for money:

Decide on your life economic goals.   What do you want to happen in your life that costs money?   Assign dates to each goal so that you can spread your economic goals over the course of your life.  Estimate the costs for your goals and dreams across your lifetime.  Then, work to make those goals happen.

Think profit.   Whether from the work you do as an employee or the work you do for your own company, profit is an imperative.  Profit is not cash flow.  Your personal profit comes after all your expenses, every last cost is covered.  The amount that remains is your profit.

What do you do with profit?  It’s your personal profit that you use to achieve your economic goals.   Your personal profit is what will fund all your economic goals from home ownership to travel and even retirement.

Multiple sources of income.   Today, it’s risky to rely only on your income from a job.  Whether you work for a company or for yourself, there are ways for you to bring in money from sources in addition to your working income.  Establishing multiple revenue streams is important. See Multiple Income Sources in this section.