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These lists, one for each person and business, should be copied and given to your spouse, trusted friend, family
member, attorney, or accountant. It is also essential to get your finances on the computer. There are plenty of good
software programs that will track your revenues and expenditures as they come and go.

Your REAL Financial Statements
Given that I believe anyone who wants to build wealth should structure the financial aspects of their life in the same
way that businesses structure their organizations, it should be no surprise to you that I think individuals should have
their own financial statements.
The profit and loss statement provides a snapshot of income and expenses—and profitability. The balance sheet
is a document that is split right down the middle; it shows the assets (what is owned) on the left, and the liabilities
and equity (who owns it) on the right. The total of assets and the total of liabilities plus equity are always the same
number; that is, they balance.

As you can see, it is from these four interdependent blocks that we derive the information for the Financial
Baseline of the Gap Analysis.
1. Revenue. The total amount of active and passive income you are taking in. This is bigger than your income,
since it includes all cash from all your activities, before costs and expenditures, taxes, interest, or any depreciation or
amortization. Revenue is not the same as income:revenue means all the money that comes in; income means all the
money that is left after the costs of making it are deducted.
2. Expenditures. This is all the money that is going out—the money that must be spent to maintain your life or
your business. We are talking about real cash, hard dollars, flowing out. Not to be confused with expenses , which is
an accounting term that includes things like depreciation, that is, accounting deductions where real cash is not going
out.
3. Assets. Everything you own.
4. Liabilities. Everything you owe.
Create Financial Statements for your personal life and for each one of your businesses. If yours is a two-family
income, list each person’s income and expenses separately within that one revenue and expenditures block, because
you may be affected by or liable for the other person’s finances.