Michael Yardney's Guide to Getting Rich by Michael Yardney

Author:Michael Yardney
Language: eng
Format: epub
Publisher: Wilkinson Publishing Pty Ltd
Published: 2015-10-27T00:00:00+00:00

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“IF YOU DON’T BUILD YOUR OWN DREAM, SOMEONE ELSE WILL HIRE YOU TO BUILD THEIRS.”

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Chapter 2.5

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Create a Personal Financial Statement

Income and assets; liabilities and expenses.

Wait a minute, you say. Isn’t income an asset? Aren’t expenses liabilities?

Why do accountants use all this confusing terminology?

There’s a very practical reason for separating income from assets and expenses from liabilities. This will become clear in this chapter as I explain how by having a picture of your assets and liabilities on the one hand and your income and expenses on the other, ultimately you’ll be able to manage your cash flow and increase your assets.

But most people don’t have a handle on this. Month after month, they look at their bank and credit card statements and are surprised by what their balance is and how much they spent.

Think about it this way...

If you asked someone “What’s your salary” or “How much money do you make”, 99% of the population could tell you an exact dollar amount. However, if you asked those same people how much profit they had at end of the year, less than 10% could give you an answer.

And it’s amazing what else those 10% could tell you. They’ll know exactly how much money they have left on their car loan or their mortgage and when they plan to pay it off.

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