The best tool for Personal Finance
So, this is where we start, the first tool I want to talk about is a financial tool, I always hated having to sort out my finances, until I realized what I could do with all my sorted financial gains.
There are a lot of books out their full of financial advice, and its all good advice, its just pretty boring and more honestly daunting, when I first used this tool to see where I stood financially it actually scared me. At least I'm still using it so it might be worth it.
The tool comes from Robert Kiyosaki's Rich Dad Poor Dad, which is arguably one of the best wealth creation books available, full of ideas of what are better investments and great practices to follow when using your money.
The tool is the INCOME STATEMENT. a basic yet powerful ledger of how each persons finances work, specifically if they are working for you or against you. You have the INCOME Column which is usually your salary, and could be interest from your Asset Column, Your EXPENDITURES Column which would be money you have to pay people, like rent, car loan, cell Phone, Savings... Pretty basic, might as well be a budget sheet, here is where the wealth creation starts. The ASSETS Column would be a list of things that pay you, yes, goes into your Income Column, things like stock investments, savings accounts which give you some interest on your savings amount. This is the column you want to fill up. Then there is the LIABILITIES Column, This one is odd, you may need one or two Liabilities, like a car loan, or home loan, but other things like cellphone contracts, credit card debt, clothing account debts are all things you need to get rid of as soon as possible.
Now I will admit, the first time I wrote out the income statement I thought this made no sense, I didn't have any assets yet so why waste my time, what I learned to do though was use visualization so I would have a plan to create assets. Which was the best thing I did, it drove me to be secure in my financial en devours. I hope this tool will help you as much as it has helped me.
Click here or go to my resources page to download this template for yourself.
