“We live in a world where in order to be successful each of us has to treat ourselves, even our personal lives, as a business venture.”
In “Net Worth”, we reviewed a snapshot of our financial situation. I want to remind you that for data from this snapshot to mean anything, we need to take those snapshots periodically along the road. However, now it is time to talk about our financial journey, which is dynamic, not static, and our work in progress. Our financial journey is reflected in our Cash Flow Statement.
While in the Net Worth Statement, we compared our assets to our liabilities, in Cash Flow Statement, we will compare our income to our expenses. Income means everything that brings us money: our salary, business income, dividends, interest, and capital gains from our investment portfolio, rental income, tips for those who get them, social security or insurance payouts and so on. Expenses mean anything that we pay money for to somebody else. It can be rent, mortgage, property taxes, regular taxes on personal or business income, groceries, transportation, utilities and bills, gym membership, subscription services and so on. Read More