Personal Cash Flow Statement: The Movement of Your Cash

Personal cash flow statement is one of the statements that we use in personal finance review. In this article, we will see how this statement looks like.

Sample cash flow statement

The period of a cash flow statement is generally one year.

Components of cash flow statement

Cash flow statement can generally be divided into two parts. The first part is your income and the second part is your expenditure.

I think the income part requires no explanation, it includes all cash received during the year. We only need to fill in according to the categories. Nonetheless, the categories are not fixed and you can classify the cash inflows according to your preference.

Expenses can be divided into savings and investments, fixed and variable. Fixed expenses are outflows with consistent amount and frequency which should not be missed. Examples include mortgage payment, insurance premium, and taxes. On the other hand, variable expenses are outflows that are not fixed in amount and would fluctuate month to month. Examples are food, utilities, and fuel.

After deducting total outflows from total inflows, you will get your net inflow. If the number is positive, it means you have a cash surplus and it is a good sign. If the number is negative, it means you have a deficit and you are not getting enough income to cover your expenses.

Cash flow improvement

With the cash flow statement, you will have a clear view of your cash movement. The general objective is to have a surplus. This extra cash can be deployed to reduce your liabilities and/or increase your assets.

If your current net inflow is negative, it is important to address this issue urgently. The deficit must be funded, either through your savings or borrowing. If this situation goes on, it will cause financial difficulty in the future – either your assets diminish and/or your liabilities balloon. This predicament is definitely not good for life.

The ultimate purpose of cash flow statement is to help you to unlock cash to invest for your future. You can use the template above to construct your cash flow statement and come up with your own plan to get more free cash. It can be achieved by getting more income, reducing your expenditure, or both.

How can a financial planner help you?

I will help you to construct your cash flow statement, making sure you did not miss out anything in your income and expenditure. However, I can only rely on the client to provide accurate information. If you really do not remember an item, I also cannot capture it in the statement.

With the information, I will give recommendations to improve your cash flow. Depending on your objectives, I will give a few suggestions but you are the ultimate decision maker. Even if the plan is perfect, it would not work if you do not implement it. So you should let me know your preferences and select a plan that you would implement wholeheartedly.

If you really cannot follow the plan, do not worry and inform me as soon as possible. I will suggest some alternatives. Nonetheless, if you always fail to adhere to the plan, perhaps the plan needs an overhaul. I will help you with this.

If you are interested in working with me to improve your finances, just leave your details here. I will reach out to you and see if we would be a good fit for each other.

Disclaimer: This post is for informational purpose only. You should use judgment and conduct due diligence before taking any action or implementing any plan suggested or recommended in this article.