Ahhh yes…my favorite excuse. It is my favorite because I used it all the time! My degree is in Marketing, I am a total right brain, creative thinker and all my C’s in college were in accounting and math. With all of this information, how in the world could I be good at finances?! After all, I’m not a numbers person.
Wrong. We are all numbers people when it comes to our personal finances, because we have all been given the ability to manage our personal finances, even me. Personal finances is not rocket science. It is basic addition and subtraction. Do you feel like you have that down? Then you can do this! Let’s look at an example.
If Sarah makes a net income of $4,000 per month and her monthly expenses are $3,450, what is her monthly cash flow?
In order to calculate this, you simply take Sarah’s MONEY IN (income) = $4,000 and subtract Sarah’s MONEY OUT (expenses) = $3,450. Sarah’s net monthly cash flow is $550. This is the amount that Sarah has left over after the end of the month after all of her expenses have been paid.
When I first sit down with a client and calculate their cash flow they either get it or they are astonished. They are most likely astonished when they have a HIGH POSITIVE CASH FLOW like Sarah. They look at me with a blank stare and say, “No we don’t.” And I say, numbers don’t lie. That is the BEAUTY of numbers. That money is going somewhere and that is why it is SO IMPORTANT for us to manage our personal finances and tell that money where to go versus just having it disappear!
Looking at the example above…was it hard to calculate Sarah’s monthly cash flow? Why not give this a try with your personal finances?
Complete the Cash Flow Worksheet to take your first step towards freedom!