Financial Freedom Series: Your Cash Flow and Wealth Flow
Welcome back to our Financial Freedom Series, where we’re looking into God’s Blueprint for Building Wealth and Managing Your Money Well!
We dive into biblical principles and cutting-edge money management wisdom to help you…
- Honor God with your money
- Build wealth
- Shrink your debt
- And build toward financial freedom
“But remember the Lord your God, for it is he who gives you the ability to produce wealth.” (Deuteronomy 8:18)
“Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” (Proverbs 21:5)
“I will guide you along the best pathway for your life. I will advise you and watch over you.” (Psalm 32:8)
“The wise man saves for the future, but the foolish man spends whatever he gets.” (Proverbs 21:20)
“The rich rules over the poor, and the borrower is the slave of the lender.” (Proverbs 22:7)
“But blessed are those who trust in the Lord and have made the Lord their hope and confidence. They are like trees planted along a riverbank, with roots that reach deep into the water. Such trees are not bothered by the heat or worried by long months of drought. Their leaves stay green, and they never stop producing fruit.” (Jeremiah 17:7-8)
“Hope deferred makes the heart sick, but a dream fulfilled is a tree of life.” (Proverbs 13:12)
It is your time to dare to dream.
It is time to reset your goals.
It is time to rekindle your passion.
It is time to aim high.
It is time to attempt great things with God.
It is time to live on purpose.
It is time to reignite your vision.
It is time to be fruitful.
It is time to get positioned for God to
catapult you into your destiny.
Your best days are ahead of you.
Your Cash Flow and Wealth Flow (Understanding Your Income Statement and Balance Sheet)
If you can understand your INCOME STATEMENT and BALANCE SHEET, you will know what is happening with your money management. And if you gain control over your income statement, you can break the debt cycle and build toward financial freedom.
If you can understand your CASH FLOW and WEALTH FLOW, you can revolutionize your money management.
So, let’s break it down…
What is Your Income Statement?
An INCOME STATEMENT is a statement that clearly shows your INCOME and your EXPENSES.
INCOME refers to money that you EARN and causes money to FLOW IN.
EXPENSES refers to the money you SPEND and causes money to FLOW OUT.
Your income statement will show the FLOW of your CASH.
If you spend less than you earn, you will have a POSITIVE CASH FLOW.
If you spend more than you earn, you will have a NEGATIVE CASH FLOW.
Your INCOME brings wealth flowing IN.
Your EXPENSES cause wealth to flow OUT.
| YOUR INCOME STATEMENT… INCOME – EXPENSES = CASH FLOW |
What is Your Balance Sheet?
A BALANCE SHEET is a statement that clearly shows…
- Your ASSETS
- Your LIABILITIES
An ASSET refers to any ITEM OF VALUE that can be converted into cash – WHAT YOU OWN.
Your assets include…
- Cash in your bank savings
- Investments
- Property
- Personal items
Your assets have the potential to earn extra income through interest, dividends, and rental income, which will cause more money to flow back into your income statement.
A LIABILITY refers to any DEBT you have to re-pay, usually with interest – WHAT YOU OWE.
Your liabilities include…
- Loans
- Mortgage (home loan)
- Credit and store card debts
- Vehicle finance
Your liabilities will increase your expenses, causing more money to flow OUT of your income statement.
Your BALANCE SHEET will give you a good understanding of your NET WEALTH.
| YOUR BALANCE SHEET… ASSETS – LIABILITIES = WEALTH PORTFOLIO |
To create WEALTH, your ASSETS need to be greater than your LIABILITIES.
If you spend all you earn, you will NOT BUILD UP ASSETS.
If you have too much debt, all your income will go towards LIABILITIES.
| INCOME STATEMENT | BALANCE SHEET |
| INCOME: Use your hard-earned money wisely. Save and invest so that you can turn your income into assets. | ASSETS: Growing your assets will lead to building your wealth portfolio and will bring in more income. |
| EXPENSES: Cut wasteful expenditure and spend less than you earn. | LIABILITIES: You need to shrink your debts. |
So, How Does this Affect You?
INCOME brings wealth flowing IN.
EXPENSES cause wealth to flow OUT.
If you have too much debt, this will ERODE your CASH FLOW, preventing you from saving and investing. Instead of building assets, you will then create greater DEBT that will cause more money to flow out.
If you save and invest part of your income, you will grow your ASSETS and bring more INCOME in. This will allow you to BUILD your WEALTH PORTFOLIO and allow you to reach FINANCIAL FREEDOM.
