The document introduces The Financial Fence, a new way of thinking about personal finances using colored categories. It describes sky blue for income, orange for expenses, green for capital, and red for debt. It then shows examples of balance sheets, income statements, and cash flow statements to track finances over time and bring the full financial picture together. The Financial Fence aims to provide a complete picture of where you started, what financial activities occurred, and where your finances ended up.

1. © Copyright The Financial Fence Pty Ltd 2006

2. The Financial Fence®
A New Way of Thinking
Way of Thinking
© Copyright The Financial Fence Pty Ltd 2006

3. The Financial Fence®
A New Way of Thinking
Introduction to the Key Colours
Sky Blue Represents Income : “The Sky is the limit”
Orange Represents Expenses : “Proceed with Caution”
Green Represents Capital : “The Garden where I grow things”
Red Represents Debt : “Danger, use with extreme caution”
Dark Blue Represents Equity : “Accumulated wealth”
© Copyright The Financial Fence Pty Ltd 2006

4. The Financial Freedom Equation
YOUR
TIME INCOME
EXPENSES Investment
Income
SURPLUS
PERSONAL INVESTMENT
CAPITAL DEBT REDUCTION CAPITAL
© Copyright The Financial Fence Pty Ltd 2006

5. Return or Accumulation? – River or Reservoir
Accumulation Mindset says :
“Reservoirs are great because I have value
around me and Rivers can run out.”
Return mindset says
“Reservoirs don’t create any flow, they
just sit there and give you nothing;
what I need is flow.”
© Copyright The Financial Fence Pty Ltd 2006

6. The Financial Fence® - Example
BALANCE SHEET
“AS AT”
PERSONAL
Video One
CAPITAL
$316,000 Introducing the concept that
INVESTMENT
CAPITAL
Capital must equal Debt + Equity
$63,000
i.e. $316,000 + $63,000 =$379,000
DEBT
$111,500 + $267,500 = $379,000
$111,500
EQUITY
$267,500
© Copyright The Financial Fence Pty Ltd 2006

7. The Financial Fence® - Example
Video Two
Showing how a person’s activity works.
PERSONAL INVESTMENT EXPENSES INTEREST NET
INCOME INCOME INCOME
$51,000 $180 -$37,000 -$7,800 $6,380
NET INCOME CHANGE IN CHANGE IN NET CASH FLOW
+/- to Debt PERSONAL CAPITAL INVESTMENT CAPITAL +/- to Debt
-$6,380 $5,500 $5,000 $4,120
© Copyright The Financial Fence Pty Ltd 2006

8. The Financial Fence® - Example
BALANCE SHEET BALANCE SHEET
“AS AT” “AS AT”
THE FINANCIAL FENCE ®
PERSONAL NET INCOME STATEMENT PERSONAL
CAPITAL “FOR THE PERIOD” CAPITAL
$316,000 $321,500
INVESTMENT INVESTMENT
CAPITAL CASH FLOW STATEMENT CAPITAL
“FOR THE PERIOD”
$63,000 CHANGE IN
$68,000
PERSONAL CAPITAL
DEBT
$5,500 DEBT
$111,500 $115,620
EQUITY
Video 3 EQUITY
$267,500 Bringing it all together $273,880
© Copyright The Financial Fence Pty Ltd 2006

9. The Financial Fence® - Example
BALANCE SHEET BALANCE SHEET
“AS AT” “AS AT”
THE FINANCIAL FENCE ®
PERSONAL NET INCOME STATEMENT PERSONAL
CAPITAL “FOR THE PERIOD” CAPITAL
$316,000 $321,500
INVESTMENT INVESTMENT
CAPITAL CASH FLOW STATEMENT CAPITAL
“FOR THE PERIOD”
$63,000 CHANGE IN
$68,000
INVESTMENT CAPITAL
DEBT
$5,000 DEBT
$111,500 $115,620
EQUITY
Video 3 EQUITY
$267,500 Bringing it all together $273,880
© Copyright The Financial Fence Pty Ltd 2006

10. The Financial Fence® - Example
BALANCE SHEET BALANCE SHEET
“AS AT” “AS AT”
THE FINANCIAL FENCE ®
PERSONAL NET INCOME STATEMENT PERSONAL
CAPITAL “FOR THE PERIOD” CAPITAL
$316,000 $321,500
INVESTMENT INVESTMENT
CAPITAL CASH FLOW STATEMENT CAPITAL
“FOR THE PERIOD”
$63,000 NET CASH FLOW
$68,000
+/- to Debt
DEBT
$4,120 DEBT
$111,500 $115,620
EQUITY
Video 3 EQUITY
$267,500 Bringing it all together $273,880
© Copyright The Financial Fence Pty Ltd 2006

11. The Financial Fence® - Example
BALANCE SHEET BALANCE SHEET
“AS AT” “AS AT”
THE FINANCIAL FENCE ®
PERSONAL NET INCOME STATEMENT PERSONAL
CAPITAL “FOR THE PERIOD” CAPITAL
$316,000 NET $321,500
INCOME
$6,380
INVESTMENT INVESTMENT
CAPITAL CASH FLOW STATEMENT CAPITAL
“FOR THE PERIOD”
$63,000 $68,000
DEBT DEBT
$111,500 $115,620
EQUITY Video 3 EQUITY
$267,500
Bringing it all together
© Copyright The Financial Fence Pty Ltd 2006
$273,880

12. The Financial Fence® - Example
BALANCE SHEET BALANCE SHEET
“AS AT” “AS AT”
THE FINANCIAL FENCE ®
PERSONAL NET INCOME STATEMENT PERSONAL
CAPITAL “FOR THE PERIOD” CAPITAL
$316,000 PERSONAL INVESTMENT EXPENSES INTEREST NET $321,500
INCOME INCOME INCOME
$51,000 $180 -$37,000 -$7,800 $6,380
INVESTMENT INVESTMENT
CAPITAL CASH FLOW STATEMENT CAPITAL
“FOR THE PERIOD”
$63,000 NET INCOME CHANGE IN CHANGE IN NET CASH FLOW
$68,000
+/- to Debt PERSONAL CAPITAL INVESTMENT CAPITAL +/- to Debt
DEBT
-$6,380 $5,500 $5,000 $4,120 DEBT
$111,500 $115,620
A complete picture showing
EQUITY
where you were, what you did, EQUITY
$267,500 $273,880
and where you ended up! © Copyright The Financial Fence Pty Ltd 2006

13. Contact us
Email: service@onesherpa.com
www.thefinancialfence.com
www.onesherpa.com
© Copyright The Financial Fence Pty Ltd 2006