Cash Flow Analysis
We take Cash flow analysis very seriously. Creating a Cash flow analysis and tracking it represents the foundation for any stable and successful financial strategy. Cash flow analysis refers to the system that is created to manage your income and expenses. Those who simply earn income and pay bills are not engaged in the process of Cash flow analysis , that is survival. Authentic cash flow analysis involves understanding the components that make up your sources of income, how that income is being spent and what choices are being made that can affect the long term progress of your personal financial strategy. It is an active process and one that is more holistic in nature than only establishing a budget. It will give you key insight in how you are allocating your funds in order to maximize your budget and create more opportunities for savings and investments.
In order to establish a sound Cash Flow Plan, you need to identify the following:
Sources of Income
A vehicle that provides a regular supply of money for an individual or a business such as employment, the sale of goods and services, investments, consulting, among others.
An involuntary fee levied on corporations or individuals that is enforced by a level of government in order to finance government activities.
Fixed expenses are costs that do not change from month to month. They may increase in value over time due to inflation or personal lifestyle choices but when it comes to personal finances, fixed expenses are generally referred to basic necessities that must be covered every month such as rent, food, education, among others.
Money spent on non-essential items such as luxury commodities or vacations. Ideally the funds are spent after fixed expenses, taxes, savings and investments have been fulfilled.
The amount disposable income that is allocated for investments, future anticipated expenses and emergency reserves.
The action or process of investing money for profit or material result.