Glossary
Personal Cash Flow
Companies take cash flow seriously because they know profit does not pay bills, cash does. The same logic applies to individuals: having a positive bank balance on one day does not mean much if in the next 10 days $ 50 will come in and $ 4,000 will go out.
How to calculate yours
- List all monthly inflows (salary, freelance, refund, dividends).
- List all monthly outflows (fixed costs, variable expenses, debts).
- Subtract: inflows − outflows = net flow of the month.
- Repeat for 3 months to see a trend.
Cash flow vs balance
| Concept | What it shows |
|---|---|
| Balance | How much is in the account today. Snapshot. |
| Cash flow | How much came in and went out over a period. Movie. |
| Net worth | Everything you have minus everything you owe. Total. |