How to Manage your Cash Flow

Cashflow management is the fundamental basis of accelerating prosperity. In simple words cashflow management is how you handle money. These critical numbers tell you how much is going in and out of your pocket.

Cash flow should be tracked weekly, monthly or quarterly. There are two type of cash flows you should look out for:

Positive cash flow: this happens when there is money flowing in and at the end of the month you have more money left over than what you spend.

Negative cash flow: this happens when there is more money leaving your account that you actually have. This is the type of cash flow you should avoid at all costs.

What happens if you’re not on top of your cash flow? 

Failing to monitor your cash flow, puts your personal finances at risk and can lead to several problems.

First and foremost, you lose track of what money comes in and what comes out. In order to avoid such situation, a tracking system should be implemented to control your spending. In addition to not tracking your spending you are going to lead a poor quality of life. This is due to an increase of bad debt (e.g. credit card debt) as you are financing your lifestyle with money you do not have.

Keeping Track

It goes without saying that keeping track of your cash flow, you will know exactly what money goes in and out and you will avoid debt. It also means you will lead a better quality life. In addition you can start using the good debt, which is the one you use to put your investments in place. If you invest wisely investments will pay themselves and even give you a profit meaning you create multiple sources of income for yourself.

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