Introduction To The Financial Fence®


A New Way of ThinkingThe Financial Fence®Way of Thinking


A New Way of ThinkingThe Financial Fence®

Sky Blue

Orange

Dark Blue

Green

Red

Represents Income : “The Sky is the limit”

Represents Expenses : “Proceed with Caution”

Represents Capital : “The Garden where I grow things”

Represents Debt : “Danger, use with extreme caution”

Represents Equity : “Accumulated wealth”

Introduction to the Key Colours


The Financial Freedom Equation

SURPLUS

INCOME

EXPENSES

INVESTMENT CAPITAL

PERSONAL CAPITAL

YOURTIME

InvestmentIncome

DEBT REDUCTION


Return or Accumulation? – River or Reservoir

Accumulation Mindset says :“Reservoirs are great because I have value around me and Rivers can run out.”

Return mindset says“Reservoirs don’t create any flow, they just sit there and give you nothing; what I need is flow.”


EQUITY

$267,500

BALANCE SHEET“AS AT”

DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000

The Financial Fence® - Example

Video One

Introducing the concept that Capital must equal Debt + Equity

i.e. $316,000 + $63,000 =$379,000$111,500 + $267,500 = $379,000


Showing how a person’s activity works.PERSONAL

INCOME

$51,000

NET INCOME+/- to Debt

-$6,380

INVESTMENTINCOME

$180

EXPENSES

-$37,000

INTEREST

-$7,800

NETINCOME

$6,380

CHANGE INPERSONAL CAPITAL

$5,500

CHANGE ININVESTMENT CAPITAL

$5,000

NET CASH FLOW+/- to Debt

$4,120


Video Two


EQUITY

$273,880

DEBT

$115,620

EQUITY

$267,500

INVESTMENTCAPITAL

$68,000

PERSONALCAPITAL

$321,500


$5,500


CASH FLOW STATEMENT“FOR THE PERIOD”

DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000


NET INCOME STATEMENT“FOR THE PERIOD”

THE FINANCIAL FENCE ®BALANCE SHEET

“AS AT”

Video 3

Bringing it all together


EQUITY

$273,880

DEBT

$115,620

EQUITY

$267,500

INVESTMENTCAPITAL

$68,000

PERSONALCAPITAL

$321,500


$5,000



DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000




“AS AT”

Video 3



EQUITY

$273,880

DEBT

$115,620

EQUITY

$267,500

INVESTMENTCAPITAL

$68,000

PERSONALCAPITAL

$321,500


$4,120



DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000




“AS AT”

Video 3



EQUITY

$273,880

DEBT

$115,620

EQUITY

$267,500

NETINCOME

$6,380INVESTMENT

CAPITAL

$68,000

PERSONALCAPITAL

$321,500



DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000




“AS AT”

Video 3



EQUITY

$273,880

DEBT

$115,620

EQUITY

$267,500

PERSONALINCOME

$51,000

NET INCOME+/- to Debt

-$6,380

INVESTMENTINCOME

$180

EXPENSES

-$37,000

INTEREST

-$7,800

NETINCOME

$6,380INVESTMENT

CAPITAL

$68,000

PERSONALCAPITAL

$321,500


$5,500


$5,000


$4,120



DEBT

$111,500

INVESTMENTCAPITAL

$63,000

PERSONALCAPITAL

$316,000




“AS AT”

A complete picture showing where you were, what you did, and where you ended up!


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Introduction To The Financial Fence®

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Transcript of Introduction To The Financial Fence®