{"id":1582,"date":"2020-10-05T02:42:19","date_gmt":"2020-10-05T02:42:19","guid":{"rendered":"https:\/\/smartlivingscientist.com\/?p=1582"},"modified":"2020-11-22T21:38:45","modified_gmt":"2020-11-23T02:38:45","slug":"h2o-money-the-water-cycle-for-money","status":"publish","type":"post","link":"https:\/\/smartlivingscientist.com\/h2o-money-the-water-cycle-for-money\/","title":{"rendered":"H2O Money – The Water Cycle For Money"},"content":{"rendered":"\t\t
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Wouldn\u2019t it be great if our money was like water and how it just falls from the sky when it rains, and how it never runs out because of the water cycle?<\/p>

Here on planet Earth, we will never have to worry about running out water. Unless of course, the sun blows up into a red giant and literally boils all of the water into outer space\u2026<\/p>

Thankfully, we don\u2019t have to worry about that happening anytime soon.\u00a0<\/p>

But, what if our money was like that – never running out and automatically recycled into our bank accounts?\u00a0<\/p>

Just imagine being able to spend our money on whatever we want and however we want without having to feel guilty about it or worry about running out.<\/p>

In many ways, money is very much like water.\u00a0In fact, our money can be exactly like water! There’s even a water cycle for money!<\/p>

I call this H2<\/sub>O money or H<\/b>owever (you like)\u00a02<\/b>\u00a0O<\/b>perate money.\u00a0<\/p>

And just like the water cycle, there’s an H2<\/sub>O money cycle.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How money is exactly like water or H2O<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Water is a molecule that is made up of two elements – hydrogen (H) and oxygen (O). It has 2 hydrogen atoms and 1 oxygen atom bonded together, hence the chemical formula H2<\/sub>O.<\/p>

As you know, water is essential for all life on Earth. We need water in order to survive. Just like water, money is essential for us to live our lives. Money allows us to have essentials like food, shelter, and transportation, all of which are needed for us to live.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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Money and water can both be liquid<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Water has three physical states – solid (ice\/snow), liquid (water), or gas (water vapor\/steam). In its liquid form, water flows when it is not impeded.\u00a0<\/p>

Like water, money also flows. Money flows through your expenses and liabilities and then back into your pocket or bank account from your source(s) of income. Whenever you use your money for goods and services, that money flows back into the economy. Likewise, when you trade your time and provide your services in the form of a job, money flows into your bank account.<\/p>

Money can often be described as liquid. Liquid money is essentially money that can be easily accessed and moved around. Cash on hand is considered the most liquid as you can use it immediately or move it however you like.\u00a0<\/p>

Money that is tied up like the money you put into a down payment for a house or invest in certain mitochondrial accounts<\/a> such as 401(K) is not liquid. They’re more like icebergs (solid) – they are trapped inside and cannot be moved or accessed until a certain time or under special circumstances. In the case of retirement accounts like a 401(K), your money inside all that ice will become liquid when it completely melts, which is when you reach the age of 59\u00bd.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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H2O Money<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The hydrogen atoms that make up water by themselves can be dangerous as hydrogen is flammable. On the other hand, oxygen is not flammable. Similarly, money can be both dangerous and safe – it just depends on how you use it.<\/p>

Like hydrogen, H2<\/sub>O money is dangerous when you do not know how to use it. Spend too much or beyond your means and you’ll either fall into debt or run out of money.<\/p>

Like oxygen, H2<\/sub>O money can be safe if managed and spent appropriately. It is also essential for our survival much like how we need to breathe oxygen to live.\u00a0<\/p>

And because there are two hydrogen atoms and only one oxygen atom, H2<\/sub>O money is more dangerous than it is safe. For many of us, we know it’s so easy to spend money but much harder to earn and make money. We know it is much easier to fall financially behind than it is to get financially ahead.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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H2O Money Cycle - The Water Cycle for Money<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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We won’t ever run out of water because water gets recycled via a process known as the water cycle.\u00a0<\/p>

We get our fresh water from rivers, lakes and reservoirs. Whenever we take water from these sources, water is replenished when it rains (precipitation).\u00a0This is essentially how it works.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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The Water Cycle<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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There’s no starting point, but we will begin in the oceans since this is where most of the water is on Earth. Water in the oceans gets heated by the sun and some evaporate as vapors into the air (evaporation). Another way water vapor gets into the air is through evaporation of water from plants and soil (transpiration) and from turning ice and snow directly into water vapor (sublimation).<\/p>

Once in the air, the cooler temperatures turn water vapor into clouds (condensation). This is also why Earth will never run out of water – the atmosphere is cold, causing water vapor to always condense into clouds instead of rising into outer space.<\/p>

Once there is enough water vapor in the air, water will fall from the sky (precipitation). Precipitation comes in many forms. Most often it’s rain, but it can come as snow, hail, sleet, and ice pellets depending on the climate conditions.<\/p>

Water mostly falls back into the oceans, lakes, and rivers, or onto land where it flows over the ground as surface runoff. As water flows across the land, some get absorbed or flows directly into the ground due to gravity (percolation) where it becomes groundwater. Groundwater eventually flows back into the oceans where the whole water cycle process repeats.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The H2O Money Cycle<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Just like water and the water cycle, H2<\/sub>O money can be automatically recycled into your bank account only if you have assets<\/b>\u00a0and an automated personal finance system to create the H2<\/sub>O money cycle<\/b>.\u00a0<\/p>

Well actually…you only need assets, but it helps to have an automated process so you do not have to be too involved. Let’s be honest, no one really wants to spend most of their time managing money. I much rather have you spend the time doing things you actually care about.<\/p>

Here’s what the H2<\/sub>O money cycle looks like, how it works, and how you can create your own.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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How it works<\/h4>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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To understand how the H2<\/sub>O money cycle works, let’s look at the typical and ideal cash flows. Cash flow is essentially the movement of your money.\u00a0<\/p>

The cash flow that many people have only flows in one direction. Money comes in from a job and goes out towards paying expenses and liabilities. There is no cycle and the money stops coming as soon as the job goes away.\u00a0<\/p>

On the other hand, the ideal cash flow is similar but it has money going towards expenses – expenses that are used to pay for assets. These assets generate money, providing you with another source of income. Money generated by assets flows back into paying your expenses and acquiring more assets.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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How to create your own H2O money cycle<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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All you need to create your own H2<\/sub>O money cycle is assets. As long as you have assets generating you money and you use this added income to acquire more assets, you will never run out of money.\u00a0<\/p>

To simplify things, assets are simply anything that puts money in your pocket or bank account. They include things such as real estate (investment property), stocks, retirement accounts, and even credit cards.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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Liabilities, on the other hand, are anything that takes money out of your pocket or bank account. They include things like loans, cars, credit card debt, etc.\u00a0<\/p>

The key to creating the H2<\/sub>O money cycle is to use your H2<\/sub>O money to buy assets.\u00a0<\/p>

We all have to use our money to pay bills, loans, and buy essentials such as food. Any money left over we tend to save it away, spend it on things we want and make us feel good, or splurge on life’s simple pleasures.<\/p>

And rightfully so.\u00a0<\/p>

H2<\/sub>O\u00a0money is meant to be spent however you want. I strongly believe in not depriving ourselves while we are on our journey to living the dream life. The key is discipline and balance – to be in equilibrium if you will.\u00a0<\/p>

The easiest way to start is by putting your money in\u00a0mitochondria instead of in vacuoles<\/a>. Here are three easy ways to start your H2<\/sub>O money cycle.<\/p>

Related Article:\u00a0Is Your Money Saved In Vacuoles Or Mitochondria?<\/a><\/strong><\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Save your money in a high-yield savings account<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The simplest mitochondrion to start with is a high-yield savings account. If you only have a checking account or your current bank’s savings account has little to no interest, consider opening a high-yield savings account. Saving your money in a high-yield savings account will consistently give you more money.<\/p>

It is by no means a lot of money nor is it a great way to earn extra income.\u00a0 However, it is better than not earning anything at all. It’s literally free money that banks pay you for banking with them.<\/p>

And who doesn’t want free money?<\/p>

So what high-yield bank accounts should you consider?\u00a0You can check out the\u00a05 best high-yield bank accounts according to my research here<\/a>.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Contribute to your employer's 401(K) plan<\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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If your employer has a 401(K) plan, contribute at minimum the percentage of your income that your employer matches. Again, it’s literally free money!<\/span><\/p>

Employers typically match 100% of what you put into your 401(K) up to a maximum of 3% of your income. This means if you contribute more than 3%, say 5%, your employer only matches 3%. If your paycheck is $1000 and you contribute 5% ($50), your employer will throw in $30.<\/span><\/p>

Yes, it’s money that you cannot use until you are 59<\/span>\u00bd years of age or when you retire. But it’s free money your employer gives you to use in the future.<\/p>

You also get a tax break by contributing to a 401(K), which means you pay less in taxes. The idea here is that you will pay less in taxes by the time you withdraw the money because you will likely be in a lower tax rate when you are retired.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Use credit cards for purchases and improve your credit score <\/h3>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Another asset, albeit a dangerous one when not used appropriately, is credit cards. Using credit cards to pay for your purchases will help you earn money back in the form of cash back or reward points\/miles. It’s like saving a certain percentage on your purchases each time and you do not get this by using a debit card.<\/p>

Credit cards can provide you with hundreds, if not thousands of dollars each year depending on how much you spend, what credit cards you use, and how you use your rewards. For example,\u00a0my credit card saved me well over $2,000 on my trip to Ireland in 2019<\/b>.<\/p>

Credit cards also help you improve your credit score. They are also the fastest and easiest way to boost your credit score into the 700-800 range. Having a great credit score will help you save money and make everything cheaper for you because you will be qualified for low interest rates offered on any loan.<\/p>

The key here with credit cards is to\u00a0use them responsibly<\/b>. Only use them for purchases that you can otherwise pay for in full with cash and pay off the monthly statement balance in full.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Final thoughts<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Money is a lot like water and the water cycle. H2<\/sub>O money is meant for you to spend however you like but the key to wealth and living the dream life is to be discipline and balanced with your spending. Spending too much and acquiring a lot of liabilities will hurt you.<\/p>

Creating your own H2<\/sub>O money cycle will allow you to spend more on the things you value and desire, and it will allow you to do so completely guilt-free. It will allow you to live your dream life.\u00a0<\/p>

And it’s not very difficult.<\/p>

Start simple by saving your money in a high-yield savings account. You can start contributing to your employer’s 401(K) plan and use credit cards responsibly for your purchases to boost your credit score. Once you have these nailed down, you can start looking into other assets to further strengthen your H2<\/sub>O money cycle.<\/p>

The most important thing is to start and be consistent at maintaining your H2<\/sub>O money cycle.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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