Completing Your Financial Statement Lyrics

Finally, though, let's finish up the financial statement

After you've done the income, you've done the expenses

Listed your assets, and listed your liabilities

It's time to add it up

You'll notice at the bottom of assets

There's actually two total assets

One is the banker's version of your assets

And the other is the rich dad version

Now, remember the key distinction

Is that your banker is going to call your doodads assets

And that's true

In fact, according to generally accepted accounting principles

Those things we're now calling doodads are assets

They're something you could sell for some value

So that needs to be added as the banker's version

But remember, we're trying to create a financial statement

That an investor would use, that rich dad would use

So we want to see what rich dad's version

Of your total assets would be

If you refer back to Max's, you'll

Note that everything he had was a doodad

Therefore, he had total assets under the banker's version

But he had nothing for rich dad version

And that will really help us in the next part

Where we talk about developing a plan

Because you'll be able to analyze

Your own financial statement and see

What percentage of your assets, quote unquote

The banker's assets, are really doodads

And then you can look at that and say

How can I make that adjustment different?

Right, and then the final part of this

Is to find out what the net worth is

And again, if you look back at Max's

Poor Max has a negative net worth

In other words, he has all this debt, school loans, car loans

Credit loans that exceed the total amount of assets

Even when you consider according to the banker

And the net worth is even worse when

You consider according to rich dad

Because he has no assets

Poor Max is stuck with a problem

And as he looks at his financial statement

The questions he might ask himself are

What happens if I lose my job?

How long could I possibly survive?

What happens if my car breaks down?

And then the true looming problem

Of what am I going to do at tax time?

Where am I going to get more money?

Or maybe where can I get another credit card?

So Max is stuck with questions

In the next step, we're going to now learn

About how to set goals and how to analyze further

What you see

At this point, finish your financial statement

And come up with your numbers

Take the time to do the work and find it

You'll find the financial statement form

That you can use in section two, page two-36

And that will help you be able to bring all of your material together

That dining room table is now covered

And you've got it in piles

And it's time to bring it together and find the category

You may have to have separate sheets that you

List all your expenses on, separate sheets that you

List your liabilities

It's tedious work, but believe me

You will help yourself the most by truly understanding where you are

Total all that income

Total all that expenses

Those are the two elements of your income statement

Many people think of it as their checkbook

But that's the income statement

Then go through each one of those elements

And say, of all of that income, do I have the related asset

If there is one, in my balance sheet?

Then look through all your expenses

Is that a car payment?

I better make sure I have the loan related to that car

Payment in my liabilities section

Go through it all

Double check it

It's the accountant in me

Now bring down your totals and get a total

For your total income, less total expenses

Then get total assets, total liabilities

The difference between your total assets

And your total liabilities is your net worth

And you're going to end up with two different net worth numbers

Your net worth that your banker would have

And the net worth per rich dad

And that's where you're going to use the two different asset

Numbers that we had before

Now that you have your financial statement done

We're ready to move to step two

Set your new goals

Let's go

Now you may not have that personal accountant

Or the property manager to provide you

With that information on the net income from your business

Or your real estate or the actual asset value

So we have created some schedules

That will help you walk through the steps

And the related expenses for that piece of property

Or that business that you own

And you'll find those in the program

Under section three, pages three-six through three-12

These schedules were prepared to help you take the information

That you have and go step by step

To make sure that you're using the correct calculations

And the correct information to generate the net income

Or loss from each of the properties or businesses

That you own, and also to calculate the net asset value

The value of the property, less the related mortgage

Or the value of your business, less any debt

And that will help you get the information

To transfer to your financial statement.