Cash flow is pretty much what it sounds like. It’s basically money flowing in (income) and money flowing out (expenses and spending). Not really complicated, right?
Thing is, though, there needs to be an over-balance of money flowing in over money flowing out so that saving and investing are possible. Makes sense, huh?
What happens when there’s more money flowing out than flowing in? NOT A GOOD THING! More money flowing out than flowing in means no saving, no investing and getting into trouble, maybe losing the house, car, and other stuff.
Everybody should work to have more money flowing in than flowing out, but I know a number of people that don’t. Shame. They’re never going to have a financially sound life.
Early in our marriage, my wife and I didn’t have enough cash flowing in. We went into debt and even had to default on a land loan. Yep, we learned. We figured out how to have more money flowing in.
I’m not into detailed budgets, but I have figured out a simple budget that works. I calculate all of our monthly expenses, and monthly amounts to save for not monthly expenses, plus savings. Once I have this figure then I know how much we have to spend on whatever we want. Simple enough to work for us.
You’ll find useful info in the links below. Check ’em out!