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Financial Answer Center

Cash Flow Issues and Record-Keeping

Understanding Your Cash Flow

Managing your cash flow and debt allows you to reach more of your financial goals than would otherwise be possible. The best single strategy you can employ is to be certain that your spending is consistent with your goals. Having an accurate cash flow statement can:

  • help you understand your planning opportunities
  • show where you are spending your money
  • tell you how much you are saving every year
  • give you an indication of whether your spending and saving habits are in line with your goals.

The purpose of making detailed projections of anticipated cash flow is to highlight any point in the future where you will come up short, so that you can take steps in advance to prevent that occurrence. Your financial professional can determine how much income will come from current operations and how much will have to be borrowed to meet your budgeted cash needs. Another benefit of evaluating your cash requirements is that you may determine there are certain areas where expenses can be trimmed.

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