Lesson 5-1: Personal Financial Statements
Attempt: 5
Introduction
"Financial peace isn't the acquisition of stuff. It's learning to live
on less than you make, so you can give money back and have money to invest. You
can't win until you do this."
-Dave
Ramsey
(Financial Author)
Throughout your life you will have to make a range of financial decisions for your family in an effort to achieve your goals and accumulate wealth. These decisions include, but are not limited to buying versus renting a home, paying off credit card debt or investing for retirement, and buying disability, home owners and life insurance. Over your lifetime, your family will experience different events that with either benefit or hurt your financial position. If you prepare well for the potentially damaging events you should still be able to achieve your family’s long-term financial goals, but that will mean sacrificing your monthly cash flow today in order to be prepared for a future unknown crisis. However, some mistakes that you may make include not buying adequate insurance to protect against disability or property loss, acquiring too much credit card debt, not investing enough for retirement, or investing funds in the wrong assets to grow wealth over time. In order to better understand how every financial decision impacts your present and future position, it is imperative to understand how your personal finances through a financial statement perspective.