Wealth is Good
Cash Flow Is Better

The 8020 Worksheet™ is a simple automated tool that allows you to measure and manage your key financial information in one place.  It includes your net worth, which is a measure of your wealth, and your cash flow, which is a measure of your financial independence.

The 8020 Worksheet™ has three main components:

1. The top portion includes your balance sheet, comprised of assets (what you own) and liabilities (what you owe).  It also shows monthly cash flows – positive and negative – associated with each of your balance sheet items.  Assets, liabilities, and cash flow amounts in this section are FIXED amounts.
2. Next is the Variable Living Expenses section.  It’s the sum total of your numerous daily living expenses (food, clothing, utilities, travel, entertainment, etc.).  This is a cash flow item – a negative cash flow – and these expenses vary in amount from month to month.
3. Income from Wages and Salary (a positive cash flow) is listed last.

Why is Wage and Salary income listed last? Simple: If your goal is to become financially independent, then you won’t have to rely on your salary (or your spouse’s) to enjoy a positive monthly cash flow.  Instead, you can rely on positive cash flow from your other assets – captured in the top section of the 8020 Worksheet™.

Keith Whelan is Cashflownavigator's founder and author of the "Wealth is Good, Cash Flow is Better" e-booklet. He is a graduate of Columbia University Business School, teaches at Rutgers University, and has over 30 years experience in the banking and financial services industry. Keith, his wife Cindy, and their two sons live in New Jersey.