Understanding how your funds flow from income to expenses is the first step to using good cash flow management to build your wealth.
Cash flow is the movement of money in and out of your possession through income and expenditure.
- Positive cash flow is where you have more money coming in than going out, resulting in savings. Positive cash flow is useful to meet debt obligations and lets you have money up your sleeve for when you need it
- Negative cash flow is where your outflows are higher than your inflows in a given period.
Understand where your money comes from and where it goes
Once you understand where your money comes from and where it goes, you can start to take control of this flow and consciously invest, receive returns from those investments and manage your funds.