Cash Flow Statement
Cash flow statement serves as a tool to help identify your current spending patterns. Having insight to your spending habits is a good starting point for predicting spending in retirement. Despite your initial reluctance to create a cash flow statement, this exercise is usually eye-opening! The cash flow statement is illustrated by a simple formula.
Cash inflows – cash outflows = Net Cash Flow
Cash Inflows
Cash inflows come from gross salaries (i.e., before taxes and payroll deductions) and from other sources – namely investments.
Inflows
Paola Salary $40,000
Anthony Salary $85,000
Interest Income $3,500
Total Inflows $128,500
Cash Outflows
Cash outflows of cash go to savings and investments and to various fixed and variable expenses: mortgage and other loan payments, taxes, and entertainment and living expenses.
Outflows
Savings and Investments $5,000
Fixed outflows
Mortgage $15,780
Insurance $1,500
Car Note $5,400
Total Fixed outflows $27,680
Variable Outflows
Food $10,200
Transportation $2,600
Medical/dental $3,600
Taxes $14,500
Miscellaneous $9,000
Travel $12,000
Total Variable outflows $51,900
Net Cash Flow (or Deficit)
Cash inflow $128,500
Cash outflow $79,580
Net cash flow $48,920
Cash Flow Statement
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