Personal Finance
The annual and monthly rhythm of a well-run household.
Personal finance, at institutional standards, is the operation of a small treasury. It has a balance sheet, an income statement, and a cash-flow forecast. Households that keep these three documents in some form make better decisions than households that do not — the effect is larger than the effect of any single investment choice.
This course teaches you to run your own household as a going concern. You will build the three documents in a working template, hold them for at least one full month, and complete a Lab that produces a defensible twelve-month budget.
- 01
Build a household balance sheet and income statement.
- 02
Draft a cash-flow forecast for the next twelve months.
- 03
Distinguish a spending decision from a capital allocation decision.
- — Course 101 — Money.
- — A willingness to open your own accounts in front of the material.
1–2 weeks · ~5 hours plus the Lab.
- IModule · ~1.5 hours plus data collection.
The household balance sheet
Assets, liabilities, and the number that matters.
The balance sheet is the single most useful document in personal finance and the one households most reliably avoid producing. This module makes producing it routine.
What You Will Be Able To Do- — Assemble a personal balance sheet from real accounts.
- — Compute net worth honestly, including illiquid assets and contingent liabilities.
- — Read the trend line of net worth as the primary scoreboard.
Why hereEvery subsequent decision — save, borrow, insure, invest — is judged against this document. Skipping it makes the rest of the School abstract.
- IIModule · ~1.5 hours plus one month of live reconciliation.
Cash flow
The number that determines whether the plan is real.
The balance sheet tells you where you are; cash flow tells you where you are going. This module closes the gap between planned and actual money movement.
What You Will Be Able To Do- — Categorize income and expense into a taxonomy you can maintain.
- — Run a monthly reconciliation without dread.
- — Produce a twelve-month cash-flow forecast that survives contact with reality.
Why hereThe reconciliation habit is the compounding one — households that reconcile monthly for a year compound insight the way portfolios compound returns.
- IIIModule · ~1 hour.
Budgets that survive
Rules of thumb, and when to break them.
Most published budgets do not survive their first grocery run. This module presents the two rules-of-thumb that do — and the discipline required to hold either one.
What You Will Be Able To Do- — Apply the 50/30/20 rule to a real household.
- — Run a zero-based budget for one month.
- — Choose between the two, defensibly, for your own household.
Why hereA budget is a contract between your calm self and your future self. Both selves must be able to keep it.
- IVModule · ~3 hours of focused work.
Lab: Build a Budget
The first practical artifact of the School.
The Lab is where the course becomes concrete. You produce a personal balance sheet, income statement, and twelve-month forecast — the first artifact of your Scholar portfolio.
What You Will Be Able To Do- — Produce three documents that a stranger could reconstruct your household from.
- — Defend the assumptions behind your forecast in writing.
- — Submit for peer review and iterate on the response.
Why hereThe credential ladder begins here. Every subsequent course adds capabilities on top of this Lab.
The most common mistake in personal finance is to skip the arithmetic and go straight to advice. We do the opposite. Numbers first. Advice, if any, later.