Interactive Lesson

Money Basics

1. Core Theory

Personal finance rests on three key pillars: Cash Flow (what comes in vs goes out), Assets (things you own that hold or grow in value), and Liabilities (money you owe to others). The ultimate goal of financial planning is to increase your Net Worth (Assets minus Liabilities) by redirecting surplus cash flow into investments.

2. Formula & Framework

Net Worth = Total Assets - Total Liabilities

3. Worked Example

If you have $10,000 in bank savings (Asset) and a $3,000 credit card debt (Liability), your net worth is $7,000.

Open Connected Tool: Financial Health Workspace

Concept Check Quiz

Test your understanding of the core concept.

1.Which of the following is considered an asset?

2.If your monthly income is $5,000 and your monthly expenses are $4,500, what is your net surplus?

Educational Notice: Academy lessons are designed for personal financial literacy only. Calculation results and formulas do not constitute licensed investing or legal tax advice.

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