How to Make Your Own Financial Statement

This is going to be the very, very basics of making your own personal financial statement. Reading Rich Dad, Poor Dad inspired me to do this, and though it is an extremely simplified version of the common financial statement prepared by an accountant, it is a simple reminder of your goals and how to get there.

There are only four simple categories that you should absolutely list in your first financial statement: Income, Expenses, Assets, and Liabilities.

Income: List all income that you receive monthly from your work.

Expenses: List all of your monthly expenses. These are the things that you must pay money for each month like rent, utilities, food, alcohol (if you are the average college student), cell phone bill, etc.

Assets: Things that put money into your pocket. Should be forms of passive income that are secure. Example: Poor Student No More.

Liabilities: Things that take money out of your pocket. A mortgage or rent, credit card bills, fruit of the month club.

These are EXTREMELY simplified definitions, but they certainly keep it simple and get the job done. I've found that keeping it simple keeps me focused on my ultimate goal: grow my assets larger than my liabilities (in monetary value) and make my passive income greater than my expenses.

So, put these into four columns and start listing your items with descriptions and amount ($). Total up the values for each column.

Next, make a prospective financial statement for exactly 1 year after. What do you want this sheet to look like? Be sure to keep it realistic though! Work with what you have, but don't sell yourself short either!

Post both of these statements somewhere where you can see them every day - your wall, mirror, in your closet, on the fridge - and every month make updates on your progress. As you go along, you'll find out what works, what doesn't, and how to optimize your progress.

Don't freak out if you don't reach your goals in 12 months! Keep working and figure out why you didn't hit that goal.

After you reach your 12 month financial plan goals, start setting longer term goals - 3 years, 5 years, and 10 years. These will be less detailed, but very worth it in the long run!

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How To Go To Heaven: www.jesus-is-savior.com www.aolnews.com Stunning Cocoa Grab Could Hike Prices, Lower Quality Jul 19, 2010 Parents worldwide may agree that too much chocolate is a bad thing, but one British hedge fund manager clearly would differ. Last week Anthony Ward, manager of the hedge fund Armajaro Holdings, made a big bet on the rising price of chocolate by picking up about $1 billion worth of cocoa beans. And in a departure from business as usual, where traders simply trade the rights to buy or sell commodities at a certain price in the future, Ward had all 240000 tons physically delivered to Armajaro. Representing the largest delivery of the product in 14 years, it was a stunning move -- yet one in keeping with the money man the British press has dubbed "Choc Finger," after the Bond villain Goldfinger. World chocolate prices have more than doubled in the past two years, and poor harvests in Ghana and the Ivory Coast have further squeezed supply. Some analysts now worry that Ward's purchase is an attempt to gain enough power to manipulate the market. "If it looks like cornering, feels like cornering, it probably is cornering," Eugen Weinberg, an analyst with German financial institution Commerzbank, told the Telegraph. Some have noted that Ward made a tidy profit off poor African cocoa bean harvests in 2006 with a similar deal, clearing about $60 million off a purchase of 200000 tons. But according to the BBC, there's nothing illegal about Ward's reputed ...

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The Financial Road Blocks to Home Ownership

There are many obstacles, including the decision it is now time to find the house and actually get a mortgage, find housing and feed you your finances will occur in an impartial manner - to be honest with yourself. Many people do not know where you spend the first step is knowing where your money goes - to enter the business itself.
No company is working with the books and records required - should not you in your life. You are abusiness as is your life. Go back over 6 months of bank statement and record to find out where you are spending. If you have no records then start now. Keep all receipts (and most importantly get receipts) for items and services purchased. Get a notebook or ledger or use a computer spreadsheet and itemize your expenses. You should have a column for housing, transportation, communications, medical, insurance, groceries, entertainment, clothing, online shopping, debt repayment, etc. Once you have a 6 month record or so to work from begin to add up each area of expenditure and calculate it as a percentage of your total income. Make sure that you use your after-tax income for this calculation or alternatively have a column for taxes and then calculate from gross income, also calculating the amount you are paying in taxes (although we can’t help you there). I guarantee you will be surprised by what the figures tell you. The figures never lie!
As a general guideline no more than 30% of your income shold be used to pay your mortgage, with 15% toward transportation, 10% for savings and 15% for debt repayment. Look for areas where you are exceeding these amounts and look for ways to curb these expenses.
You will need to prioritize spending to meet your short and long term goals. If you are spending 25% of your income on entertainment you may be able as a single person to affford it – but if your long-term goal is marriage and a family and home then you might be moving in a better direction to limit your spending now to save more toward this goal.
Keep the record-keeping going though regardless. You will never meet your goals if you don’t have a yardstick to ensure that you are on track. You should also make a budget. Keep it realistic and then keep on track. This will help you realize your goals. By keeping a budget vs actual expense log you will know if and where you are going wrong.

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Anatomy of a Financial Statement - Property Management

Robert Kiyosaki likes real estate investing is because real estate touches each part of his financial statement. Starting with his best-selling book Rich Dad Poor Dad and continued in many of his subsequent books, Robert explains how real estate gives cash flow to his income statement and on the expense side of the income statement he's able to deduct the property's depreciation as an expense.

When seen from the balance sheet, he's able to gain appreciation on the asset side and the leverage provided by the bank rounds out the liability side of the balance sheet.

Through a property management company you can also access the four parts of the financial statement. Here's how:

Balance Sheet: Asset Column

Every property producing monthly rent is an asset. It is possible to sell the rights to manage the property to another property manager for a lump sum of money.

Balance Sheet: Liability Column

Robert uses his banker's money aka leverage in order to purchase a large property with only a small percentage as a down payment. When the property goes up in value he is able to keep the entire appreciation amount without having to share it with the bank. He can use leverage and still get the benefit of 100% of the appreciation.

In the property management business, leverage is achieved through controlling the income of a property. A property that is producing $500/month in rent gives a property manager $50 in income. If the manager feels that $500 is too low for the area, then her or she can increase the rents by 10% to $550 and the management company's income will go up 10% accordingly. How many companies can increase their income by 10% without a causing uproar among its clients?

Income Statement: Income Column

As a property management company, you take your 10% management fee directly off the top after the rents have been collected. Here again, if the manager feels that rents are too low, the manager simply raises the rent and increases the income to both the manager and the property owner. It's win-win!

Income Statement: Expense Column

While Robert Kiyosaki is able to depreciate the building as an expense, a property management company cannot take this tax advantage because a property manager doesn't own the building-the owner does, however, a manager is able to make money off the expenses incurred by the owner of the property.

Let's say that a tenant calls to say that the plumbing underneath the sink is leaking. The manager sends out his repairman to fix the leak. The repairman sends a bill to the property management company for the $12.00 plumbing parts plus $30.00 for his hourly rate.

The property manager now marks up the bill by lets say $10.00 and now charges the property owner $12.00 for the parts and $40.00 for the repair time. The $10.00 is for the manager's orchestration of taking the call from the tenant and sending out the repairman.

Now multiply this scenario by the management of 200 properties and you'll find that expense mark-up is a significant source of a manager's income.

As you can see real estate allows an investor to utilize all four parts of a financial statement. As a property manager, you can piggyback on the owner's shoulders and receive some of the same benefits of cash flow and leverage and you can actually profit from the property in ways an investor cannot i.e. expense mark-up.

And here's the best part -and the prime example of a property management's ultimate leverage: the manager isn't responsible to the bank for making the payments on the mortgage. The owner is responsible! The property manager is able to make money off the property without being personally responsible to the bank for the asset that creates all the money in the first place.

What a concept!

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