Friday, October 22, 2010

Book Review - The Flow of Time and Money

By Linda C Smith
There are lots of books in the world about the economy, about the need to have more income as a protection against hard and lean times. There are books that toll bells of financial doom and others that try to educate. But very few tell you how to get from here to there.

Dr. Lloyd Watts, in his book*, "The Flow of Time and to create a full and prosperous life," tells you how to transition from Middle Class to Financially Independent.

What could be simpler than understanding that the transition from Middle Class to Financially Independent is to:

* "...Pay Yourself First, Accumulate Capital, Buy Assets that produce Passive Income, until that Passive Income equals your expenses...." and to do this you:
* "...find out that changing your flow of money requires effort, self-education, and consistent daily action toward long-term goals. All of these relate to how you manage your time...."

This is where Dr. Watts' book diverges from the others. He gives clear and concise diagrams and explanations for the flow of money - how the average middle class person's income comes in and goes out in expenses - and the flow of time - how the average middle class person's time is set but goes out in "expenses" related to income. It actually all makes sense, especially when you look at his simple leaky bucket diagrams.

Dr. Watts also shows how altering the flow of time and money can transition you from middle class to financially independent. Changing the flow of money to include passive income gradually eliminates the need for a job which has a direct impact on the flow of time - what you do with your time.

"...It's no coincidence that Time and Money have the same structural form...Some people call it Life Energy, or Life...But, if they are really the same thing, how does one get converted into the other? The poor and middle class do it the easy way. They spend their time working for money, and their employer does the conversion for them...We get our 168 hours/week, which is spent sleeping, eating, bathing, watching TV, commuting and working. Our employer pays us for that work, and we spend money on taxes, food, shelter, entertainment and toys. At the end of a life, what do we have to show for it?...."
A theme I find in this book is the idea of leaving a legacy. He says in his section on The Flow of Life:

Dr. Watts is obviously a bit of a philosopher. Although his book is short and to the point, it invites thought and contemplation. He takes us from a discussion of the flow of money and time and how we can transition from middle class to financially independent - and how to get there - but also he concludes with what I call Life Questions:

* "...there is more to life than just financial success. Other important aspects of a person's life can include their relationships, health, spirituality, artistic endeavors, community service, contribution to the world, etc. Ultimately, we may ask what kind of a legacy have we left behind...."
* "...Try asking yourself this question: 'What is the biggest problem in people's daily lives that I can meaningfully address?'...Help even one person solve a problem, and you make a difference to that person. If you can generalize your solution method and share it with a lot of people, you will make a contribution to the world...."

I find that this book hits at a good time, given the current global economy and the fact that millions of Baby Boomers are beginning to ask those legacy-type of questions of themselves. Understanding where we are financially and understanding how that standing effects how we spend our time is valuable information. Add to that Dr. Watts' explanation of how to get from middle class to financially independent and what that would do to how we spend our time gives us some ammunition to change our situation.

A thought that just occurred to me - in my parents' day, their goal was to be middle class. They wanted nothing more than the comfort of a house, at least the one car, a steady paycheck and food on the table. Now, we can't even be sure we can keep the house we have, cars are expensive to keep and maintain, our paychecks are no longer a sure thing and food prices are continually rising. Dr. Watts' book comes at a good time.


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