Cashflow and Compounding
Using your personal financial statement
Building your PFS
3. An expense item could have a positive capital value.
For example, if you own your home, it is likely to cost you cashflow to maintain, and is therefore a cashflow liability.
If the maintenance costs are $5,000 per year, then enter -$5,000 in the profit and loss, or cashflow column.
However, your home is likely to have a positive capital value.
So if your home is worth $400,000 (capital value = $400,000), you can enter this number in the balance sheet, or capital value column.
The table to the right shows how the Personal Financial Statement looks with the above information entered.
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