The cash flows for Personal Finance

The cash flow for personal finance is nothing but the money is flowing into your pocket or bank account, comes as both exit and enter as an income, meet their needs and what is the net result of all these operations over time.

During 2003 to 2005, studied the MSc Finance at IESA, one of the subjects that attracted me most was "Money for Entrepreneurs", delivered by an excellent teacher and member of the entrepreneurial center of that institution. In that area were 4 main topics of which the most important in my opinion was: The cash flow.

I remember that we often read: "Cash flow is the lifeblood of business." Say that he lacked the cash flow is not only the blood but also the business of personal finance. A person with a cash flow is a bad person who succumb to an army of creditors who did not leave in peace. A person with a faulty cash flow sooner or later collapse.

The cash flow for both business people and has three components:

Cash flow positive (HR +): which is the income received by the person, usually consist of salaries, wages and other income generated by the employment of the company where he works (Night bonus, overtime, utilities and other ). If the person is independent then the cash flows are positive all the revenue it receives from its fees.

Negative cash flow (CF-): They are having an outgoing person, ie, the cost to do a person over a given period. They are an example of negative cash flow: Expenditure on food and market costs of electricity, gas, water, electricity and telephone costs of educating the person, their spouse or their children, transportation expenses, medical expenses, costs of debt and finally, all those expenses that the person has over a given period.

Net cash flow (FCN): The net cash flow is obtained by subtracting the negative cash flow to cash flow positive.

Ie apply the formula

FCN = positive FC - FC negative.

If the net cash flow shows a positive result, it says that the person has a positive net cash flow.

If the net cash flow to a negative, it says that the person has a negative net cash flow.