Money in and money outThe bottom diagram is the...
Money in and money outThe bottom diagram is the Balance SheetIt is called that because it is
supposed to balance assets against liabilitiesMany financial novices don't know the relationship between the Income Statement and the Balance SheetThat relationship is vital to understand
The primary cause of financial struggle is simply not knowing the difference between an asset and a liabilityThe cause of the confusion is found in the definition of the two wordsIf you want a lesson in confusion, simply look up the words "asset" and "liability" in the dictionary
Now it may make sense to trained accountants, but to the average person, it may as well be written in MandarinYou read the words in the definition, but true comprehension is difficult
So as I said earlier, my rich dad simply told two young boys that "assets put money in your pocket Nice, simple and usable

"This is Cash chanel vintage jewelry Flow pattern of a liability

Now that assets and liabilities have been defined through pictures, it may be easier to understand my definitions in words
An asset is something that puts money in my pocket
A liability is something that takes money out of my pocket
This is really all you need to knowIf you want to be rich, simply spend your life buying assetsIf you want to be poor or middle class, spend your life buying liabilitiesIt's not knowing the difference that causes most of the financial struggle in the real world
Illiteracy, both in words and numbers, is the foundation of financial struggleIf people are having difficulties financially, there is something that they cannot read, either in numbers or wordsSomething is misunderstoodThe rich are rich because they are more literate in different areas than people who struggle financially So if you want to be rich and chanel cambon handbag maintain your wealth, it's important to be financially literate, in words as well as numbers
The arrows in the diagrams represent the flow of cash, or "cash flow Numbers alone really mean littleJust as words alone mean littleIt's the story that countsIn financial reporting, reading numbers is looking for the plot, the storyThe story of where the cash is flowingIn 80 percent of most families, the financial story is a story of working hard in an effort to get ahead Not because they don't make moneyBut because they spend their lives buying liabilities instead of assets
For instance, this is the cash flow pattern of a poor person, or a young person still at home:

Job (provides income)-> Expenses(Taxes Food Rent Clothes Fun Transportation)
Asset (none)
Liability (none)

This is the cash flow pattern of a person in the middle class:

Job (provides income)-> Expenses(Taxes Food omega aqua terra watch Mortgage Clothes Fun Transportation)
Asset (none)
Liability (Mortgage Consumer loans Credit Cards)

This is the cash flow pattern of a wealthy person:

Assets(stocks bonds notes real estate intellectual property)->income (dividends interest rental income royalties)
Liabilities (none)

All of these diagrams were obviously oversimplifiedEveryone has living expenses, the need for food, shelter and clothing
The diagrams show the flow of cash through a poor, middle class or wealthy person's lifeIt is the cash flow that tells the storyIt is the story of how a person handles their money, what they do after they get the money in their hand
The reason I started with the story of the richest men in America is to illustrate the flaw in the thinking of so many peopleThe flaw is that money will solve all problemsThat is why I cringe whenever 1 hear people ask me how to get rich prada bags online quicker Or where do they start? I often hear, "I'm in debt so I need lo make more money
But more money will often not solve the problem; in fact, it may actually accelerate the problemMoney often makes obvious our tragic human flaws Money often puts a spotlight on what we do not knowThat is why, all too often, a person who comes into a sudden windfall of cash-let's say an inheritance, a pay raise or lottery winnings-soon returns to the same financial mess, if not worse than the mess they were in before they received the money Money only accentuates the cash flow pattern running in your head If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spendingThus, the saying, "A fool and his money is one big party," I have said many times that we go to school to gain scholastic skills and professional skills, both ladies omega watches importan