The Secret to Personal Wealth

Hidden Figures

The Secret to Personal Wealth

In the bustling heart of New York City, amidst the clamor of the Stock Exchange and the endless streams of cabs, Emily, a fresh-faced financial analyst, found herself entranced by a world of numbers. Tucked away within the daunting skyscrapers, she was entrusted with dissecting financial statements of businesses, large and small.

But this isn’t the story of Emily as an analyst. It’s the story of Emily as an individual, standing at the precipice of her personal financial journey.

Emily, like most of us, had bank statements, pay stubs, credit card bills, but had she ever put together a personal financial statement? Hardly ever. Yet, in the context of businesses, she could tell a story with the numbers—profitability, liquidity, solvency, cash flows—all painted a vivid picture. But could she translate this prowess to her personal finances?

As we delve into this intricate puzzle, we need to understand the vital pieces – the net worth statement, the cash flow statement, and the budget. These are the hidden figures in plain sight that contain our financial destiny.

Net Worth Statement – This is the balance sheet of your life. It shows what you own (assets) versus what you owe (liabilities). The result, aptly named “net worth,” offers a quick snapshot of your financial standing. It’s like looking at yourself in the mirror, except it’s your financial self.

Cash Flow Statement – This encapsulates how money moves in and out of your life, tracking your income and expenses over a period. It’s like a diary, where you jot down everything you earn and spend.

Budget – A budget is your financial plan for the future, reflecting your priorities and values. It’s the roadmap that guides your spending decisions, a curated blueprint of your financial future.

But why should we care? Isn’t it enough to just know we can afford our lifestyle and save a bit for rainy days? Well, consider this: the hidden figures tell a story—a story of our past, our present, and our future. They show patterns, predict outcomes, and offer control.

Ever wondered why some people are seemingly in the driver’s seat of their financial lives, cruising down the freeway, while others appear to be stuck in a rut, bogged down by unexpected financial detours and dead ends? The secret is in these hidden figures.

In the next blog in our series, Echoes of Fortune: A Deep Dive Into the Net Worth Statement, we’ll embark on a journey to decipher these hidden figures, illuminating the paths we might take. We’ll untangle the complex webs of our financial lives, one figure at a time. We’ll examine how Emily uses these statements to drive her personal finances, applying the knowledge from her professional life to her personal life.

If we are to regain control over our financial destiny, we need to embrace these figures, these seemingly mundane and complex calculations. Like Emily, we too must navigate the skyscrapers of numbers, guided by our personal financial statements.

Follow the link below to continue our story.

References:

  1. Gladwell, M. (2000). The Tipping Point: How Little Things Can Make a Big Difference. Boston: Little, Brown.
  2. Gladwell, M. (2008). Outliers: The Story of Success. New York: Little, Brown and Company.
  3. Kobliner, B. (2009). Get a Financial Life: Personal Finance in Your Twenties and Thirties. New York: Simon & Schuster.
  4. Ramit, S. (2009). I Will Teach You to Be Rich. Workman Publishing.
  5. Tzu, S. (2014). The Art of of War.

Avery Rock Financial, LLC is a registered investment adviser.  The information in this material is for educational purposes only, is not intended to predict or guarantee future market performance, and is not intended to act as individualized tax, legal, financial, or investment advice.  Data contained herein from third-party providers is obtained from what are considered reliable sources.  However, its accuracy, completeness, or reliability cannot be guaranteed. Please consult a qualified attorney or tax professional for individualized legal or tax advice. Please contact a financial advisor for specific information regarding your individualized financial and investment planning needs.