Do you already have a personal income statement you update each month or quarter? If you do that is perfect and you are on your way to understanding your finances. If you don’t have a personal income statement that is fine too since we’ll be working below to build one.
I honestly don’t expect many people outside of the finance or accounting profession to have a personal income statement they keep up with. Why would most people? Its a little odd. I’m a numbers nerd though, so odd is my game.
We can argue about whether the personal balance sheet or income statement is more important in the journey to financial independence. I’ve seen this debated online in the past and people have strong opinions on both sides. I personally believe it depends on how far down the path to financial independence you currently find yourself.
In other words: “What should I do with my money and when, please”. I’m sure this is the same question most people are asking themselves. Everyone has money and needs to put it to use but there is no real unified plan. There is no personal finance flow chart to walk down for each stage in our life. Or is there?