Know Your Financial Health

I attended a talk today and i am sharing with you the highlights here.

Your Financial Health can be categorized into 4 statuses:

Note: -ve means NEGATIVE, +ve means POSITIVE

1) Dangerous = -ve CASH FLOW, -ve NET WORTH
2) Poor = +ve CASH FLOW, -ve NET WORTH
3) Good = +ve CASH FLOW, +ve NET WORTH, Most of the income is from ASSET
4) Great = +ve CASH FLOW, +ve NET WORTH, High Income which grows exponentially

To calculate your Financial Health, you need to:

1) Calculate your CASH FLOW
--> Income - Expenses = CASH FLOW

2) Calculate your NET WORTH
--> Asset - Liabilities = NET WORTH

INCOME = Your Job
EXPENSES = Your monthly expenses
ASSET = Your asset that generates INCOME
LIABILITIES = Your asset that causes expenses