Using the same trip analogy, if the net worth is your location as you travel, your income on your “cash flow” statement is the speed you’re traveling. This is the second number you should be tracking. Taken together, your net worth and cash flow will help you benchmark your progress against others and yourself.
A positive cash flow number reveals that you are adding to your net worth each month, while a negative number indicates declining wealth. Increasing cash flow is the key to growing wealth – the means by which wealth is increased.
More importantly, these numbers are universally understood in the business world. They give you the vocabulary and common language to communicate with other professionals about your status and progress on your personal finance journey. Again, most people assume these numbers are just for businesses. Remember. You are a business. So do what businesses do!
- Take your net monthly income (what you earn after taxes are withheld)
- I personally start from gross income and then subtract taxes and expenses, so I can precisely account for taxes, deductions and 401k savings.
- Subtract your total monthly expenses (food, shelter, clothing, entertainment, saving, giving) from your net income
- Difference between income and expenses is cash flow.
Your goal is to “Grow the Gap” between income and expenses as large as possible.
- Get the Income as big as possible.
- Get the Expenses as small as possible.
The bigger the gap between your income and expenses, the more you’ll build wealth and the faster you’ll do it. It’s a very simple concept. The difficulty is in execution.
Do you have an income statement for your own finances? Let me hear from you.
Veryy god blog! Do youu havce aany helpfl hhints ffor aspiring writers?
I’m hopibg too stwrt my own site slon buut I’m a litftle lost oon everything.
Would youu advfise starting with a free latform like WordPress or goo foor a pai option? There aare so man choicfes oout there thatt I’m completely connfused ..
Anny recommendations? Blesws you! ofvd9wuapt31ntu1h7di
Hello would yyou mind letting mee knoow hich webhost you’re utilizing?
I’ve loaded your blog in 3 diffrent weeb browers andd I muyst sayy thks blpg loads a loot aster thn most.
Can yoou suggest a giod weeb hostng provider att a fai price?
Thajks a lot, I appreciate it! ofvd9wuapt4kgewpm59i
Appreciate this post. Willl trry itt out. ofvd9wuaptwqpdtkjwel
Goood daay vsry nie website!! Mann .. Excelkent ..
Wonderfgul .. I wil bookmarek yoour wevsite andd taie thee feeeds also?
I amm glad tto seasrch out a lott off usedul informmation right here
wihin thhe pput up, we’d likke work oout exztra straategies iin thijs regard, thak yoou forr sharing.
. . . . . ofvd9wuaptats3y7fhv1
Heya! I jst wanted to ask iif yyou ever hafe anny problems wifh hackers?
My lazt blkg (wordpress) wass hacoed andd I endedd up losing
many moths off hasrd work duee to no daya backup.
Do you haave anyy solutions too prevent hackers? ofvd9wuapte1ni7ay4ap
Thhis desgn iss steller! You obviiously know howw too kdep a rreader entertained.
Between your wiit aand your videos, I waas almokst movfed to stat myy own blog (well, almost…HaHa!) Great job.
I rally enjoyed what you had tto say, and mpre thn that,
how yoou presenbted it. Tooo cool! ofvd9wuapt750qnhikzg
Thanks a bunhch for snaring this with all flks yoou rdally kjow whast youu aare speaking about!
Bookmarked. Kindly addittionally talk over with mmy wdbsite
=). We wijll have a linnk algernate agreement among
uus ofvd9wuapt26bbzf0gcs