Cody Bergan  |  03/22/2018

What it is? And how do I achieve it?

I am constantly asked by friends, family, and clients why I invest in real estate and what benefit it has for me. My answer is very simple; it provides functional wealth for my family. My definition of functional wealth is when your assets are providing for your day-day life. You’re not relying on your 9-5 or day job to pay your monthly bills. Now this is still a work in progress and we’re not too a point yet where our passive income is supporting our entire day-day. This year our mortgage is 100% funded by our passive income, which is a huge victory that we’re very excited about!

There’s only TWO very critical elements to functional wealth:

1.      Spending Plan

Do you know how much money you’re spending each month on clothing, groceries, dining out etc? Making a budget and having a spending plan is so incredibly important for functional wealth. This is about knowing exactly how much money you need to make to sustain your lifestyle. It puts every dollar you make to work. Having a budget is really empowering. It allows you to focus on your long-term financial goals and make smart spending decisions. It’s not about total restriction and always pinching pennies. It’s about living within the guidelines you set for yourself. is an excellent resource for budgeting.

2.      Cash Flow

Cash flow is the monthly revenue you are pocking from your investments. I love real estate because it provides cash flow. The stock market does not. I like to think of all the tenants that live in my houses as my employees. They go to work for me and they help me pay my bills. When you’re looking to purchase an investment you need to ask yourself, does this investment create revenue? Appreciation and tax benefits are part of the equation, but you must have cash flow to create functional wealth.

The goal is to push down the spending plan and increase the cash flow to create a SURPLUS.

You’ve achieved functional wealth when your assets (not your income) are providing for your day-day life. You’ve achieved financial freedom when you consistently have enough surplus that you can make decisions without money being the authority. Now there is obviously a huge range of financial freedom. There are people with private jets that literally can do whatever they want. For most of us, financial freedom might mean being able to quit our day job to pursue something we’re extremely passionate about. It could mean staying home with your kids or never missing a powder day.

If you achieved functional wealth and financial freedom, what would you do? How would you spend your time? It’s pretty amazing to think about. As always, we’re here to support you and help you achieve your goals. Please reach out if you want to discuss your personal goals in more detail.

Amy Bergan