The best case is a person who has wealth (assets) and income (cash inflows) and uses his income to generate assets that earn income which generates more assets which earn more income which generates more assets which generate more income . . .
A truly rich person is one who does not have to earn income, but has assets which earn income for him.
Behind all the jargon, what accounting really does is track the process or cycle of assets generating income which generates assets which generate income which generates assets . . .
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Consider a person who owns a huge mansion, an expensive car and designer clothes, but has no job.
He has wealth, but no income. He has assets which do not earn and are expensive to maintain. (The case with many an actor past his heyday). Of course, these assets can always be sold and generate temporary cash inflows. However, when they have all been sold and there is still no job . . .
Consider a person who earns an annual salary in 5 or 6 figures, but who spends all of it in consumables. He will …read more

At the end of the day, what accounting does is: it measures wealth and talks about how income creates wealth.
There is a world of difference between wealth and income. It is easy to confuse the two. And many think wealth and income are synonymous. Wealth is what is owned. Income is what is earned.
Wealth consists in assets. Income consists in cash inflows.
This post is part of the b5media Business Channel Great Blog Off! Find out more about the Blog Off at http://www.b5media.com/b5media-blogs-for-a-cause.
If you want your $$$$ to have the maximum & optimum effect on …read more

Even if you do not need to borrow to cover Expenses (especially if you are generating a Cash surplus), it is good financial strategy to borrow anyway and pay on time. Borrowing –when you know you can pay on time– establishes your credit rating and improves your credit standing. With a good credit rating and standing, it will be easy to borrow when you really need it.
If you follow the financial strategy of borrowing to establish or improve your credit rating / standing, do not keep the proceeds of the loan in your Savings Account or …read more