Overflow of Expenses Vs Overflow of Assets

 

Do you know what is overflow of water. It means, water cross the limit of specific space. For example, if you have water tank and if you filled it water but do not switch off your water motor, your water will overflow and it start to fall out of your water tank, it is the wastage of your water resource.

Now, it will very easy to understand two finance terms

Overflow of Expenses 

It means, you have the job whether govt. job or private job and you have the expenses more than the limit of your income. Spending more than your income is overflow of expenses. If you are spending more than your income, it means, you are buying the liability. 

Suppose, MR. A's salary is 

Rs. 50,000 because he is govt. bank employee

Now emotion attach with his status

Bought Rs. 10,00,000 AC Car

and Pay Rs. 10,000 per month as car loan installment

spend family food Rs. 10,000

Recently bought new home Rs. 40,00,000 with loan and pay its installment 

Rs. 20,000 per month its installment 

electricity, internet, credit card personal monthly loan bills Rs. 10,000

Monthly shopping clothes and other Rs. 10,000

Now, we are seeing, his monthly income is Rs. 50000 but expenses are Rs. 60000

Now, this Rs. 10,000 is the outflow of his expenses which he can only buy liability. 

Same liability will help to sell his car and home at low price. 

Even he is govt. bank employee but he will become poor all the time

        Overflow of Assets 

Suppose, MR. B's salary is 

Rs. 50,000 because he is also govt. bank employee in same department where A is working 

He decided to leave job after becoming financial freedom 

Bought Rs. 10,000 per month shares of good company instead 10,00,000 AC Car

and receive Rs. 1000 pa  as Dividend

This good habit will save 

save car loan installment Rs. 10,000 + Rs. 1000 pa reward as dividend + Rs. 10000 growth in the value of his share 

spend family food Rs. 10,000

Recently started SIP of  Rs. 20,000 of good MF instead buying home with loan and pay its installment 

Rs. 20,000 per month its installment 

He has dream the home after 10 years through its profit. 

Benefit of it

he is making MF asset with Rs. 140,000 per year

saving Rs. 20000 installment + Rs. 20000 per year growth in 

electricity, internet, credit card personal monthly loan bills 

Month pay in Govt. RD for buying Electric solar panel  Rs. 5000

have no credit card 

other home bill Rs. 5000

Now, we are seeing, his monthly income is Rs. 50000 but expenses are Rs. 15000 and all other is his investment means total investment is Rs. 35000 if he will do same habit for 10 years, he will be RS. 3500,000 if there is double his investment in 5 years, he will be 1 Crore plus in 10 years. With confidence to build big business and resign from job. Because he is overflowing his assets instead overflowing the expenses. 

Overflowing of asset helps to bring more asset assets through growing more incomes.