{"id":620,"date":"2010-10-01T06:50:21","date_gmt":"2010-10-01T13:50:21","guid":{"rendered":"https:\/\/maysfinancial.local\/"},"modified":"2017-02-26T02:01:59","modified_gmt":"2017-02-26T02:01:59","slug":"cash-flow","status":"publish","type":"post","link":"https:\/\/maysfinancial.local\/articles\/cash-flow\/","title":{"rendered":"What is Cash Flow?"},"content":{"rendered":"<p><strong>Cash flow is arguably the most valuable money management tool.<\/strong> It is used in concert with net wealth and balance sheets to develop a successful money management planning strategy.\u00a0 Budgeting, systematic savings, debt payments are all part of our cash flow.<\/p>\n<p><strong>Cash flow is a comparison of <\/strong><strong>money in<\/strong><strong> versus <\/strong><strong>money out<\/strong>.\u00a0 If net worth is to grow, money in must be higher than money out.\u00a0 Though simple in principle, this is seems to be difficult in practice.\u00a0 For example, the concept of &#8220;burn more calories than you take in&#8221; is simple concept as well, though as a society we seem to have just as much trouble with it.<!--more--><\/p>\n<p>In terms of analysis, one of the primary differences between net worth and cash flow is how they measure.\u00a0 From a math perspective, I tend to <strong>think of these two in the <\/strong><strong>discrete<\/strong><strong> versus <\/strong><strong>continuous<\/strong><strong> variable framework.<\/strong> Net worth is discrete.\u00a0 It measures an indivisible, specific point in time.\u00a0 <strong>Your calculated net worth is your net worth at that point in time.<\/strong> Conversely, <strong>cash flow is continuous.\u00a0 It measures your cash flow over a period of time<\/strong> which can be further divided up into smaller sections without losing its intrinsic value.\u00a0 You can measure your cash flow monthly, over six months, etc., whatever suits your needs.<\/p>\n<p>Though you may only measure your net worth annually, <strong>you should measure your cash flow monthly when just starting out<\/strong> in order to identify trends.\u00a0 If you&#8217;re more confident in your progress, maybe you&#8217;ll measure it quarterly or semi-annually.<\/p>\n<p>Managing cash flow is the lynchpin of a financial planning strategy.\u00a0 <strong>With a positive cash flow surplus funds can be directed towards goals like retirement, education plans for children, building an estate, investments, etc.<\/strong> With a negative cash flow, these things are not sustainable because sooner or later, the money will run out.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cash flow is arguably the most valuable money management tool. It is used in concert with net wealth and balance sheets to develop a successful money management planning strategy.\u00a0 Budgeting, systematic savings, debt payments are all part of our cash flow. Cash flow is a comparison of money in versus money out.\u00a0 If net worth [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3994,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[2,14],"tags":[33,151],"_links":{"self":[{"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/posts\/620"}],"collection":[{"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/comments?post=620"}],"version-history":[{"count":0,"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/posts\/620\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/maysfinancial.local\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/media?parent=620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/categories?post=620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/maysfinancial.local\/wp-json\/wp\/v2\/tags?post=620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}