5 Step Financial Tool To Improve Your Cashflow

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Have you heard about cashflow? For me, I’ve first heard this from Robert Kiyosaki’s Cashflow Quadrant.

For personal finance, it simply means the difference between your income and your expenses on a certain period.

it is important to monitor your cashflow from time to time to see whether your “financially fit” to take additional loans or on the right track achieving your desired investments.

There are two types of cash flow, it can be positive or it can be negative. You can have a positive cashflow if at the of the period you will have an excess or surplus of cash after all of your expenditures. While Negative if your expenses are greater your income.

To check for your cashflow, it is important for you to monitor your expenses and there are a lot of ways to do it. You can use an app from your phone of you can use this excel file that I’m using to monitor it.

Here’s the step by step on how you can use it for your personal finance. Click Here to Download the Tool.

Step#1: Income

cashflow - income
INCOME

This is where it all starts. Income is your capacity to earn money. It could be from your job, your business or any side hustle you have. The greater your income, of course, the greater the saving a greater chance you can save or invest more at the end of the day. Below the income is the Cashflow monitor. No need to modify, it already calculates the difference of all your income once you finished inputting all the details needed later.

Step#2: Expenses

cashflow - expenses
EXPENSES

Typical expenses cab be your rent or mortgage, car loans, utilities and common cost of living allowances. You can be detailed as much as you want on this. The more detailed you are, the control you do in your expenses.

It’s god to have a good watch on your expenses because it just blows up when you are not disciplined in your spending habits. Spending can be greater than your income if you are using credits (credit cards) from your banks.

Step#3: Budget

cashflow - budget
BUDGET

This is a bonus column. This column is linked with the Expenses column to check if you are overspend or within the desired budget for the month. It will visually tell you if you are overspending (red color) or within budget (green color) on the difference column.

Step#4: Savings or Emergency Funds

SAVINGS / EMERGENCY FUND

This s where you checked if you’re already achieved your desired emergency fund. I have included information where you can also key-in your debt like loans and credit card debts. I have debts, especially credit cards. Pay them immediately and don’t forget them. They accumulate penalties and interest rates if you don’t pay them in time.

Debts are not necessarily bad. You just need to manage them carefully and pay them on time.

Step#5: Investment income

INVESTMENT INCOME

Monitor how your investment performs and how it can affect your cashflow. This is a must if you want financial freedom. This is income that comes passively like dividends from stock and rentals fees from your properties.

DIAGNOSIS

After you have entered all your financial numbers. You can go back to Step#1 to see your Cashflow. If it is positive, it should be a green color, if negative it will be red in colors.

cashflow - scenarios
Sample Scenarios

For your situation, you can follow the action plans suggested based on your cashflow. This will guide you where you can focus your resources and energy to achieve your financial freedom.

Click Here to Download the Tool.

How do you check your cashflow? Share your thoughts in the comments below.


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