Managing Personal Finances

MANAGING YOUR PERSONAL FINANCES
USING CASHFLOW DIAGRAMS
A Guide For Visualizing Your Financial Health
Joel Wenger
Invest Safely, LLC

The information contained in this guide is for informational and educational purposes only.

Copyright © Invest Safely, LLC. All Rights Reserved 2 www.invest-safely.com

WHAT ARE CASHFLOW DIAGRAMS?


CASHFLOW DIAGRAMS ARE SKETCHES THAT SHOW HOW
YOUR CASH “FLOWS”

INCOME

EXPENSES

ASSETS LIABILITIES


THE CONNECTIONS BETWEEN YOUR INCOME, EXPENSES,
ASSETS, & LIABILITIES DETERMINE YOUR FINANCIAL HEALTH

REGARDLESS
OF INCOME

WE ALL HAVE
EXPENSES

IT’S A FACT OF EVERYDAY LIFE


WHY ARE CASHFLOW DIAGRAMS IMPORTANT?


THE MAIN DIFFERENCE BETWEEN GOOD AND BAD
FINANCIAL HEALTH IS…

INCOME

EXPENSES

ASSETS LIABILITIES

THE RELATIONSHIP BETWEEN YOUR INCOME &EXPENSES.

THE CASHFLOW PATTERN OF BAD FINANCIAL HEALTH
~ INCOME IS SPENT IMMEDIATELY ~

INCOME

EXPENSES

ASSETS LIABILITIES


THE CASHFLOW PATTERN OF AVERAGE FINANCIAL HEALTH
~ INCOME IS USED TO GET “CREDIT” (DEBT) ~

INCOME

EXPENSES

ASSETS LIABILITIES


THE CASHFLOW PATTERN OF GOOD FINANCIAL HEALTH
~ INCOME IS USED PAYING OFF DEBT & BUYING ASSETS ~

INCOME

EXPENSES

ASSETS LIABILITIES


THE CASHFLOW PATTERN OF EXCELLENT FINANCIAL HEALTH
~ DEBT IS PAID OFF & INCOME IS USED TO BUY MORE ASSETS ~

INCOME

EXPENSES

ASSETS LIABILITIES


THE CASHFLOW PATTERN OF FINANCIAL INDEPENDENCE
~ ASSETS CREATE THE INCOME USED TO PAY EXPENSES ~

INCOME

EXPENSES

ASSETS LIABILITIES


SUMMARY
Regardless of income, we all have expenses; it’s a fact of everyday life. The
main difference between good and bad financial health is how we pay for our
expenses.
Bad financial health
• Expenses account for all your income each month, you use credit cards
to pay bills, and/or borrow money to maintain your lifestyle
Average Financial Health
• A “higher” income, and a “higher” level of debt, which generates
“higher” monthly expenses
Good Financial Health
• Income is used to buy assets (such as an investment in dividend stocks)
and pay off debts
Excellent Financial Health
• Debts are paid off and extra income goes towards buying more assets
Financial Freedom
• Expenses are paid by assets that create income (i.e. dividend stocks)

FOR MORE INFORMATION…

www.invest-safely.com
blog.invest-safely.com

/InvestSafely

@InvestSafely

/InvestSafely

www.invest-safely.com/safe-investing.xml


INVEST SAFELY, LLC
http://www.invest-safely.com

TM

"As to methods there may be a million and then some, but
principles are few. The man who grasps principles can
successfully select his own methods. The man who tries
methods, ignoring principles, is sure to have trouble."
- Ralph Waldo Emerson

Managing Personal Finances

Recommandé

Recommandé

Contenu connexe

Similaire à Managing Personal Finances

Similaire à Managing Personal Finances (20)

Dernier

Dernier (20)

Managing Personal Finances