Level 1 - Step Up to Financial Freedom

View your financial statement as a report card that highlights assets, liabilities, income, and expenses. Generate cash flow from assets to cover your monthly expenses and pursue financial freedom.

Identify and evaluate the three kinds of assets—real estate, business, and paper assets (including commodities)—that generate income and cash flow to cover monthly expenses, moving you toward financial freedom.

Track liabilities as the items that take money out of your pocket, such as home, student, car, and personal loans, creating cash outflow in your monthly expenses.

Earned income is income earned by selling time and skills, such as a salary or consulting, alongside assets that generate cash flow and the other income types: passive and portfolio.

Understand passive income as earnings from assets that require no selling of time or physical presence. Examples include rental real estate, businesses managed by employees, and book royalties.

Portfolio income derives from paper assets like stocks, fixed deposits, and bonds, generating dividends or interest without requiring personal presence, and it parallels passive income concepts.

Identify three expense types: one-time, regular monthly, and expenses that seem one-time but are actually regular, illustrated by tire replacements spread over 36 months.

Identify doodads as unplanned expenses that drain cash flow, using examples like cafe coffee and donuts to illustrate non-regular spending from the cash flow board game.

Define cash flow as total monthly income minus total monthly expenses, yielding net monthly cash flow. Highlight earned, passive, and portfolio income forming total income, and cash flow from assets.

Illustrate capital gains through a gold coin example: buy at $1,700 as an asset, hold without income, then sell at $2,000 for a $300 capital gain.

Achieve financial freedom when total monthly passive income equals or exceeds total monthly expenses. Leverage passive and portfolio income to generate cash flow without selling time or a nine-to-five job.

Explain the rat race of salary income funding expenses in a nine to five life, and how assets generate income to cover expenses, shifting to passive and portfolio income.

Fast track means leaving the rat race when passive income equals or exceeds expenses. You become the lead person who can build assets with your time, without a salary.

Investments create assets that generate cash flow and passive income, using either time or money as currency. These assets aim to exceed monthly expenses and lead to financial freedom.

define return on investment as the yield on an investment and illustrate with a real estate deal: a $10k personal investment, $90k bank financing, and $1,200 annual cash flow.

Define yield and distinguish it from return on investment, using fixed deposits and bonds to illustrate annual yields and comparing them to stock dividend yields.

Cash on cash return measures the cash you receive relative to cash invested, often illustrated by the fast track concept and a $100 million investment yielding 15% in year one.

Learn about paper assets, including stocks, bonds, mutual funds, fixed deposits, and certificates, and how they generate portfolio income through dividends and interest.

Explore stocks as pieces of a business, understand how profits are shared among shareholders, and see how dividends arise from company profits as portfolio income.

Learn how bonds represent a contractual borrower-lender relationship, where a bond is a document promising repayment with interest, and why default risk can reduce bond value.

Learn how to determine your equity in an investment. See how a real estate deal can be 10 percent your own money and 90 percent debt.

Compare equity funding and debt funding using a real estate example: 10k from you, 90k from the bank as debt, while shareholders receive shares in equity.

Explore how cash functions as an asset on your balance sheet, not a liability or income, and why holding cash can erode value and should be converted into investments.

Explore what money is: a store of value and a medium of exchange, how cash loses value over time, and why gold and silver remain real money across 4000 years.

Differentiate money from currency and learn how central-bank currencies lose value as more are printed; gold and silver remain stores of value while currency serves as a medium of exchange.

Explore the three asset types: real estate, business, and paper assets, and see how a franchise provides a proven system with branding, marketing, and turnkey operations.

Network marketing uses an already in place system; build a team to replicate your actions and turn it into an individual franchise, like Amway or Herbalife.

Big business means building systems and people through pure entrepreneurship that can run without your physical presence once you scale with a team, unlike franchises or network marketing.

Define rich as having money and influence, but emphasize financial freedom over riches, achieving monthly passive income that covers expenses to avoid a 9-to-5 job.

Focus on becoming financially free by ensuring your passive income covers your monthly expenses, so you can survive indefinitely and balance wealth against liabilities.

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