I got inspired by 
After reading famous book Rich Dad Poor Dad a long time ago my financial goals became more and more clear to me.
For those of you who haven't had the chance to read the book which I can highly recommend to do so if the headline of this post has got your attention here the key concept in a nutshell.
Basically the book introduces four areas of income
- "E" Income from being an employee
- "S" Income from being Self-employed
- "B" Income from Business you own
- "I" Income from invests you do.
Those areas are called the cashflow quadrant summarized in picture below.
source
Most of those areas are easy to understand. What might get confused sometimes is the difference between "S" and "B". While "B" you are passive - you hired entrepreneurs who are running the Business for you while "S" is you are "the business" and income depends on your work.
While E + S lock up your time - B and I doesn't (so much). So if we are talking about passive income I am talking about how to come from the left side to the right one.
Cryptocurrency therefore brought a lot of opportunities for people with this kind of mind set.
First of all crypto made it possible to be an investor in start up accessible for everyone. In traditional investing you only have the chance to get on board at the time of an IPO. At that time most of the growth and value increase happened already.
And second crypto generates a lot of ways to produce passive income like the examples
I wanted to look at passive income from a higher, strategic level. When I thought about my financial goals I needed a baseline first.
step 1 - Know your wealth
I am doing sind I am 20 years old a yearly balance, profit/loss and cashflow statement for me. Yes, correct - not for a company but for me. Same concepts though. Of course it is up to you to do so but in my opinion it is necessary to have such a clear baseline to set the right goals. Of course it become more relevant the bigger your wealth is but if you just have one bank account I would do it anyway. It will than take only view minutes every year so why bother?
By that way I learned so much about finance that I became later on an CFO for a mid size company (not vice versa) - so that is a cool side effect isn't it?
step 2 - Know your cost structure
I feel it is also necessary for planning your financials to know about your cost structure. What are all your spendings? What of them are variable (you could choose to not spend it) and which of them are fix (e.g. rent etc.)?
step 3 - Setting goals
With that knowledge I made up my plan. I want to earn in 5 years more with passive income than my cost structure which means I can choose to work or not. Financial freedom.
step 4 - building capital
Old rule of thump: No risk - no reward. So getting to B and I implies that you take risks. Taking risks means you are going to fail a certain amount of times. Just be sure that you go for good risk/reward scenarios than you will succeed in the long term.
Being in the box "E" as most of the people are is not going to help. It won't work to just go on like all the years before and hope for better results to come. It is necessary that you get active and do some B and I to gain experience. I started investing in stocks when I was 22. I learned by doing and in parallel educating myself by reading books (yeah I am so old). What helped a lot - I invested together with a friend and discussed trades with him. The increased the learning curve and is highly recommended.
But to be honest I wasn't very successful in the beginning - I had some lucky shots but also significant losses. Worst one I got devastated in the financial crisis 2009. Fail and stand up - I got back up by reinvesting at the bottom of that crisis into banks which recovered a lot of my losses. Without the experience I made in the 10 years before I certainly wouldn't have done that. And I wouldn't have been investing into crypto in the way I did.
Not to forget the other side of the equation: costs. Verify your cost structure especially the fix costs. Especially when you are young you can do here a lot. It gets harder as soon as you have family - I am father of four kids so I know what I am talking about. Here in Switzerland statistic says one kid costs 1/4 of a million in a life time - I still hope that statistic to be wrong...
But I don't want to go too much into detail about costs as this could be a post on its own.
step 5 - diversify
After you gained experience in step 4 you have hopefully build up a certain amount of capital (there is a lot of truth about the saying "the first million is the hardest" - though it doesn't have to be a million to go here) you should diversify. Don't put all eggs into one basket. Same thing for B/I strategies. So having the right mix of stocks, real estate, crypto, bonds, physical asset reduces your risk. And also defining passive income strategies for crypto you can diversify into several baskets (mining, master nodes, staking, bots). I will give you an insight on how I have setup my passive income in one of my next posts. That might give you some ideas for your own targets.
I hope those basic steps are giving you at least one impulse to improve your financial management - that is all I am hoping for. If you have questions or points to add - feel free to comment. Also it would be interesting to read about your take aways of my article.
All the best for reaching your financial goals!