Cash Flow

Cash Flow

Cash flow is another good tool to track financial health and spot changes that can be made. This will give a clear picture of how much discretionary money is left over or if their is a shortfall.

Cash flow is calculated by adding all forms of inflows (Income, Bonus, business, interest, dividends, pensions etc.) and subtracting all forms of outflows (Mortgages, Taxes, Food, clothing, debt servicing, utilities, discretionary expenses etc.) including annual expenses. The calculation is typically done on a monthly basis.

Inflows (All forms of money coming in) - Outflows (all expenses, cost and discretionary spending = Cash flow

To help calculate cash flow you can use a simple spread sheet or see our resource center for calculators to help. (Yahoo has a decent one)