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Financial Statements
 


"The only place where your dream becomes impossible is in your own thinking."

                        Robert Schuller

 

Your Financial Statement is your "Report Card" after you leave school.  This is likely the only thing someone (e.g. banker) will ask from you if you want to borrow money or you may ask for if you are going to invest in stocks, or a business.  Your ability to understand a financial statement is critical.  Every financially successful person understands the importance of this "Report Card."

Below are several simple Financial Statements that reflect the different "thinking" patterns mentioned on the Home page of this web site.

 

Poor-Minded Thinking:  Generally this results in having a JOB income and expenses with no real assets or liabilities in the "banker's" terminology. (the arrows indicate the general flow of money)

Wealth Factor (WF): 0 to negative

Income

Job  


 

→  →  → 

Expenses

Rent
Car
Food
Childcare

→  →  → 

Assets

 

 

Liabilities

 

 

 

 

Middle-Class Minded Thinking:  Generally this results in having a JOB (whether as an employee or Self-Employed) income, expenses with Static assets, liabilities and no real IGA's.

Wealth Factor (WF):  0 to slightly positive (usually less than a year)

 

Income

JOB
(employee or Self-Employed)



 

  mm

                       mm

Expenses
 

Home
Car
Food
Childcare
Retirement Plan


 

                ;;;

Assets


Static:

Home
Car
Retirement Plan

IGA's:
Job
 

     Liabilities       mm

Home
Car

Retirement Plan
 

 

 

 

 

Rich-Minded Thinking:  You may have a JOB but are not dependent on it.  Your IGA's provide your income, pay expenses and purchase your liabilities (i.e. "toys").

Wealth Factor (WF):  positive (indefinitely maintain lifestyle without physically working)           

Business Income Opportunities  here fall into this category

Income

JOB ?

 

 

 

   ;;;

Expenses

Home
Car
Food
Childcare
Retirement Plan

 

 

Assets
                
hhh

               hhh
Static:

Home
Car
Retirement Plan

IGA's:
Job ?
Business
Investments
Real estate

 

Liabilities
 

 

Home
Car

Retirement Plan
 

 

 

 

 

 

 

One can argue about all of the above.  However, the bottom line is that you are more financially secure (wealthy) if you have a number a Assets generating income than just one, i.e. Multiple Sources of Income.

This can be a simple process.  There are many IGA's available.  You just have to seek them out and develop them (as the Rich-Minded people have).

 

 

 

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