This is Optimal Finance Daily, episode 1925.

Build a cash flow statement to see where all of your money flows and goes

by dawnstarksofsimplemoneypro.com

and on your host and personal finance enthusiast, Diana Mariam.

We're going to get right to today's post as we optimize your life.

Build a cash flow statement to see where all your money flows

and goes by dawnstarksofsimplemoneypro.com

Hopefully you made it through building your net worth statement without losing your will to live.

Next, turn your attention to the flow of money in your life.

While I'll refer to this tool as a cash flow statement, for personal finance,

I refer to income statements and cash flow statements interchangeably.

In the business world, these statements are two different tools that give

somewhat different information. But for home finances, we don't need to be that

technically correct. I'll call it a cash flow statement because what we want to know is

where is all our money flowing? Is it flowing into our house faster than it's flowing out of our

house? Let's see. For this exercise, pull out the list of income sources and expenses that you

prepared a couple of weeks ago here. Here are the main parts. Income.

Unlike the net worth statement, where assets, positive numbers, were numerous and required

their own sections, I usually put all income into one category. Take your list of income sources

and tidy them up as part of your cash flow statement. Examples of income. Wages, salary,

self-employment income, investment income, and passive income such as income from rental properties.

Expenses. Again, this differs from the net worth statement. Over on the net worth,

...