Cash is King and Cash Flow is Queen

In the world of finance, there are plenty of “rules” and opinions. Some people tell you to put every dollar to work, chasing high returns, while others preach the importance of saving. https://www.youtube.com/live/bH7YaIbf_sY But today, we’re here to tell you why, beyond all of that, the most foundational rule is that cash is king. It’s a principle that, when followed correctly, can give you the upper hand in both good times and bad. Bruce and I often dive into financial topics that challenge mainstream advice, and today is no different. On this episode of The Money Advantage Podcast, we tackled the controversial yet vital subject of why cash is king. Sure, you’ve probably heard people say “cash flow is king,” but we’re going a step further—asserting that holding cash is critical for long-term financial success. And no, we’re not just talking about saving for a rainy day; we’re talking about seizing opportunities, navigating crises, and maintaining control over your financial destiny. Why Most People Miss the Importance of Cash Let’s start with why this concept is so misunderstood. The mainstream narrative in personal finance typically revolves around net worth and rate of return. People assume that as long as their investments are growing, they’re financially secure. But what does cash is king mean in this context? It means your financial safety and flexibility depend more on what you can access today than what’s tied up for tomorrow.  But let me ask you this: what good is a high net worth if you don’t have liquid cash to cover unexpected expenses or seize opportunities when they arise? We’ve seen it time and time again, both in our own lives and in the financial experiences of others: you could be a millionaire on paper, but if you don’t have cash readily available, you’re not really in control. And this shift, from focusing solely on net worth to understanding the value of cash flow, is what positions you for true financial independence. When you have incoming streams of cash that exceed your expenses, you hold the keys to freedom. Yet, even that isn’t enough. Cash flow is vital, but without cash on hand, you’re exposed when life throws you a curveball. Today, we want to take you one step further: it’s not just cash flow that matters. Having liquid, accessible cash is essential. And here’s why. The Chess Analogy: Why Cash is King In chess, the queen is the most versatile and powerful piece on the board. She can move in all directions and cover great distances. But it’s the king who’s the most important. If your king is taken out, the game is over—no matter how powerful your queen was. In financial terms, your “queen” is like your cash flow. It can make bold moves and help you grow your wealth, but if you lose sight of protecting your “king”—your cash reserves—you risk being taken out of the game altogether. Even if your income is strong, losing access to liquidity can cost you the match. Cash gives you staying power. It protects you from being taken out when life delivers the unexpected. Without it, you’re one emergency or opportunity away from losing your position entirely. Cash reserves allow you to weather storms, seize opportunities, and maintain your position on the financial board. Without it, you could lose everything, even if your cash flow seems strong. Why Cash is King in Today’s Economy So, why is cash so important today, in a world where everyone is chasing returns? Let’s go back to 2009, when interest rates were at rock-bottom levels following the mortgage crisis. People were disincentivized to hold cash because it wasn’t earning them a return. Instead, many relied on cheap loans, believing they could always access capital through the bank when needed. Fast forward to today, and we’re seeing a shift back to the traditional wisdom that cash is king. In a high-interest or post-crisis economy, the ability to hold and use cash can mean the difference betwe...