Managing Personal Finances

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Visualize your financial health using cashflow diagrams.

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Managing Personal Finances

  1. 1. www.invest-safely.com
  2. 2. 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
  3. 3. WHAT ARE CASHFLOW DIAGRAMS?Copyright © Invest Safely, LLC. All Rights Reserved 3 www.invest-safely.com
  4. 4. CASHFLOW DIAGRAMS ARE SKETCHES THAT SHOW HOW YOUR CASH “FLOWS” INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 4 www.invest-safely.com
  5. 5. 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 LIFECopyright © Invest Safely, LLC. All Rights Reserved 5 www.invest-safely.com
  6. 6. WHY ARE CASHFLOW DIAGRAMS IMPORTANT?Copyright © Invest Safely, LLC. All Rights Reserved 6 www.invest-safely.com
  7. 7. THE MAIN DIFFERENCE BETWEEN GOOD AND BAD FINANCIAL HEALTH IS… INCOME EXPENSES ASSETS LIABILITIES THE RELATIONSHIP BETWEEN YOUR INCOME &EXPENSES.Copyright © Invest Safely, LLC. All Rights Reserved 7 www.invest-safely.com
  8. 8. THE CASHFLOW PATTERN OF BAD FINANCIAL HEALTH ~ INCOME IS SPENT IMMEDIATELY ~ INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 8 www.invest-safely.com
  9. 9. THE CASHFLOW PATTERN OF AVERAGE FINANCIAL HEALTH ~ INCOME IS USED TO GET “CREDIT” (DEBT) ~ INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 9 www.invest-safely.com
  10. 10. THE CASHFLOW PATTERN OF GOOD FINANCIAL HEALTH ~ INCOME IS USED PAYING OFF DEBT & BUYING ASSETS ~ INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 10 www.invest-safely.com
  11. 11. THE CASHFLOW PATTERN OF EXCELLENT FINANCIAL HEALTH ~ DEBT IS PAID OFF & INCOME IS USED TO BUY MORE ASSETS ~ INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 11 www.invest-safely.com
  12. 12. THE CASHFLOW PATTERN OF FINANCIAL INDEPENDENCE ~ ASSETS CREATE THE INCOME USED TO PAY EXPENSES ~ INCOME EXPENSES ASSETS LIABILITIESCopyright © Invest Safely, LLC. All Rights Reserved 12 www.invest-safely.com
  13. 13. 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)Copyright © Invest Safely, LLC. All Rights Reserved 13 www.invest-safely.com
  14. 14. FOR MORE INFORMATION… www.invest-safely.com blog.invest-safely.com /InvestSafely @InvestSafely /InvestSafely www.invest-safely.com/safe-investing.xmlCopyright © Invest Safely, LLC. All Rights Reserved 14 www.invest-safely.com
  15. 15. INVEST SAFELY, LLC http://www.invest-safely.comTM "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

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