Prosperity Quadrant [PQ] is not something new too but not as well known as CFQ.
The basic of PQ is simple, only 2 items namely
You can be in either one of the following quadrants:-
I. [+] Networth & [+] Cashflows
II. [+] Networth & [-] Cashflows
III. [-] Networth & [+] Cashflows
IV. [-] Networth & [-] Cashflows
Definition of Networth:
Total assets - Total liabilities = Networth
Asset includes those for personal use and investment asset, cash and cash equivalent. Balance with EPF, cash value in life insurance policy, fixed deposit account, securities (share and warrant with Bursa Malaysia), investment in unit trust etc
Liabilities = obligation you need to pay e.g. mortgage, hire purchase, study loan, personal loan, credit card outstanding balance etc.
Definition of Cashflows
Cashflows = Total Incoming money - Total Outgoing money
Incoming money includes net salary, rental income, dividend income or allowance from someone....
Outgoing money means all obligation and expenses including rent, mortgage, insurance premium etc.
Here are some scenarios......
- You've got to work smarter and harder if you are now in III and IV.
- You need to seek for Financial Planning Advice if you are in IV, I dont' think it is optional.
- If you are in II, you just have to live within your mean else you are heading to IV very soon.
- If you are in I, probably you have read the wrong post in my blog. Keep it up. Enlarge the Networth with your [+] Cashflows.
I found the following image very good to represent how to build a [+] Networth & [+] Cashflows
The designer named it "The Trek to Prosperity, Step by Step"
More reading from http://prosperityconcierge.com/trek/