CuVantis Education Series

What is a Personal Cash Flow Statement?

 A Personal Cash Flow Statement is an accounting of all your cash inflows (income) and outflows (expenses) over a given period of time.  The cash flow statement is created by listing all the sources and amounts of income you have in any month against the sources and amounts of expenses you have over the same month.  By subtracting expenses from income you can determine the direction of your cash flow (positive or negative) and the amount you have available each month to fund your goals.

Why is it important to keep a Personal Cash Flow Statement?

For many people, financial independence and retirement are major life goals.  Arguably the most important number when planning for retirement is how much income you’ll need to maintain the lifestyle you desire.  By helping you develop a firm understanding of the expenses that create your desired lifestyle, a personal cash flow statement is an invaluable tool for planning for retirement and achieving financial independence.

How can a Cash Flow Statement help me achieve my financial goals?

 People generally accumulate wealth in one of two ways:  It is either given to them through a windfall such as selling a business, receiving an inheritance or winning the lottery, or they save just a little bit on a regular monthly basis.  If you can’t count on a rich relative or the lottery, saving a little bit every month is your best option to achieve your financial goals.  Since the cash flow statement shows where you are spending your money, analyzing that statement can reveal areas where you are spending more than you want or realize, and allows you to adjust your spending to align with your most important goals.

For help creating your own personal cash flow statement, check out our Home Budget Analysis Calculator, or complete the form below to schedule an appointment with one of our advisors.

The information presented here is for educational purposes only and should not be considered financial, tax or investment advice. Please consult a qualified professional.

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