When it comes to managing money there are usually two types of people that I meet when it comes ensuring one’s financial security in life. You have one group of people who focus heavily on saving a lot of money with the intent that they won’t have to work anymore afterwards and the other that concentrates in creating streams of passive or residual income to achieve a similar goal.

While I personally do both, I personally try to focus more in finding ways to create those streams of income. It made more sense to me when I thought about it at an earlier age. For example if it was a situation such as my food supply was currently fine and dandy, I could just focus on somehow storing it for an emergency incase the supply stream runs out temporarily. On the other hand, wouldn’t it make more sense to spend energy exploring different sources or ways to grow food as well?

It’s the same thing when it comes to money in my mind. While obviously you do want to save still, spending your time and energy figuring out different ways to generate streams of revenue that will fit your particular lifestyle just seems like the logical thing to do. Speaking for myself, I personally wouldn’t rest unless I have developed a passive or residual income stream that is strong enough to get me through some kind of drought without funds in a savings account being a factor.

While obviously nothing is 100% bullet proof, I think focusing more on creating multiple income streams rather than relying on just saved money per say is a wiser way to really be prepared for emergencies or times of need.

I was reading an article today that mostly revolved around how you shouldn’t try to grow too fast in a business as it can create financial obstacles. It then talked about how you should always expect the worst as well and to make sure that you are financially prepared to go through periods of limited income flow.

This made me think about personal finance too in terms of how much funds people usually establish to consider it as their safe nest encase something happens. Some people call it their emergency funds. Most people that I talk to seem to think between $2000 to $5000 is the good base to go by.

For some reason I tend to just be general and say that a good safe nest is about five times the amount of essential expenses that you pay per month. In most cases I also still use the mentality of if you can’t payout the expense right now if there was say a yearly contract to it then I tend to not do it. That’s one way to help ensure that income flow won’t be an issue in terms of creating a debt regardless of what happens to you financially.