Cash Is King, But Cash Flow Is Queen: Building Wealth with Assets, Not Liabilities
When it comes to building wealth, I always say: cash is king, but cash flow is queen—and she runs the show. Understanding how money works isn’t about making more, it’s about knowing what to do with what you have. That starts with recognizing the difference between assets and liabilities, and using that knowledge to create real financial independence.
Let’s start with a truth bomb from Robert Kiyosaki: most Americans think they own assets, but what they really have are liabilities. A car? Liability. Fancy clothes? Liability. Even your home—unless it’s producing income—is technically a liability. Why? Because it costs you money every month in mortgage payments, property taxes, repairs, and insurance. Sure, it may appreciate in value over time, but that doesn’t help your monthly cash flow. Equity is just hope—it’s not spendable, and rising home values often come with rising costs.
So, how do the wealthy actually build wealth? They use their cash to buy cash-flowing assets. That includes rental properties where tenants cover the bills and pay you every month. Or dividend-paying stocks that drop cash into your account every quarter. Or buying into businesses where you get a slice of the profits. These are assets that don’t just sit there—they work for you.
That’s how you flip the script. Instead of working for your money, your money starts working for you.
But it takes discipline. A simple rule I follow: never spend more than 75% of your income on liabilities—and always put at least 25% into savings or asset purchases. And never, I mean never, spend tomorrow’s money today. Debt is just a way to give away your future earnings in exchange for short-term gratification. Financing a vacation? A luxury car? Designer clothes? That’s spending your freedom.
If you can’t afford to buy five of something, you can’t afford one. That’s my “Rule of Five.” Harsh? Maybe. But it’s a powerful check against impulse buying.
Getting out of the debt cycle is how you escape the rat race. Most people work to pay off things they’ve already bought, with money they haven’t earned yet. That’s a cycle built to keep you broke. The banks love it. Credit card companies love it. But it’s killing your wealth. Break free by committing to cash purchases only (with the rare exception of a home) and focusing on building income-generating assets.
Also, don’t confuse being frugal with being cheap. There’s a big difference between price and value. I’ve seen people go cheap on financial advice, software, even home repairs—and end up paying more to fix it later. Paying more upfront for quality often delivers more value in return, especially when it comes to your finances.
Financial independence isn’t a dream—it’s math. When your investments produce enough income to cover your lifestyle, you no longer need a job. And unlike a job, investments don’t take sick days or vacations. They keep paying you as long as you own them.
Yes, it takes work. It takes time. And it takes saying “no” to some things today so you can say “yes” to more tomorrow. But that’s the trade. Because freedom doesn’t come from fancy stuff—it comes from cash flow.
Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.
