Why is Cash Flow the King in Personal Finance?

What is Cash Flow?

What is the Importance of Personal Cash Flow?

What are the Benefits of Cash Flow in Personal Finance?

How to Determine Cash Flow?

How to Improve Personal Cash Flow?

What is the Example of Cash Flow in Finance?

The following personal cash flow example will help you to calculate your finances:

Description

Amount (Per Month)

Amount (Per Month)

Cash In Hand

₹1,10,000

Other Sources

₹10,000

Incomes

₹1,20,000

Household Expenses

₹50,000

EMIs

₹25,000

Insurances

₹4,500

Expenses

₹(79,500)

Savings

₹40,500

Current Investments

₹(20,000)

Cash Flow

₹20,500

Therefore, maintaining a positive cash flow in personal finance is beneficial as you will have a surplus. You can use the funds to build an emergency fund or invest. It will help you achieve your long-term and short-term goals without much hassle. Furthermore, you can pay in cash for your expenses instead of availing any loan.

FAQs on Cash Flow in Personal Finance

What things can you include in cash flow personal finance? up-arrow

It includes your income from various sources, expenses like rent or mortgage, loans, credit card bills, and expenses on your children. It will also include electricity bills, subscriptions to various media platforms and shopping expenses.

When should you do a cash flow analysis? up-arrow

You can do cash flow analysis monthly, quarterly or annually. Doing it monthly will help you more as it will guide you on whether you are spending or saving more monthly. It will assist you in lowering your spending to achieve financial goals by taking the correct actions.

What are cash equivalents? up-arrow

Cash equivalents are highly liquid short-term investments that can be easily convertible to cash upon your requirement and are one of the safest investment options. They have low risk and provide low returns.