Your Personal Financial Statement
The first step towards improving your finances is to
understand your personal 'cash flow statement'. It
provides a picture of your spending habits and can be used to identify and prioritise the areas that need to be
focussed upon in order to strengthen your financial status.
It's all about
Cash Flow!
The term 'Cash
Flow' simply refers to the amount of money you have left after all
your expenses have been taken from your income. It is the amount of
money that remains in your account each month before your next pay
day arrives. Cashflow is the most important factor for any business
to function properly and it is equally important for you as an
individual.
What does all this mean and how do I actually increase my cash flow?
Increasing our cash flow is what drives us towards becoming
financially independent. As we build our cash flow we accumulate
reserves of money, which we can send out to work for us in order to
generate more income. We should start to analyse our spending habits
to understand where our money goes each month. Once we know this, we
can make decisions to use our money more wisely, and effectively
increase our monthly cash flow with very little effort.
With your completed financial statement, you can:
Identify how you spend your money and how to free up spare
cash each month
Predict your financial status for the future
Identify problems before they happen, and prevent them
Create a financial plan to gain security for you and your
family
Identify your options for investing and retiring early
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