What Is a Personal Cash Flow Statement?

You probably know where all of your money comes from. But where does it go? If you want to get a better handle on your finances, creating a personal cash flow statement is the way to do it.

What is a personal cash flow statement, and how do you create one? Take a closer look at this powerful tool and how it can help you get closer to financial freedom.

What is a personal cash flow statement?

A personal cash flow statement tracks the following over a set period (usually monthly):

• Inflows: Your income (including salary, side hustle income, and other sources)
• Outflows: All expenses (like rent, groceries, bills, and incidental expenses)

When you subtract your outflows from your inflows, you’ll be able to see if you have a surplus (a positive cash flow) or a deficit (negative cash flow). 

Having a surplus is a good thing. It means you’re living within your means, and you can put the extra money in a savings account, invest it, or otherwise use it to improve your financial situation.

Having a deficit isn’t ideal. If you have a long-term deficit in your personal cash flow, you may find yourself relying on credit cards, payday loans, or other high-interest sources of funds to cover your expenses.

How to create a personal cash flow statement

To create a personal cash flow statement, choose a specific period to track. Most people will make their cash flow statements on a monthly basis. 

Once you’ve chosen the period you want to look at, you’ll follow some specific steps.

List your income sources and amounts

First, gather all documentation of your income. Take a look at your pay stubs (or your bank statement if you’re paid via direct deposit).

Don’t forget your side hustles or any other sources of money over the course of the month. Here’s an example list of income sources:

• Salary: $3,430.12
• Payment for Helping Friend Move: $100
• Income From Doing Online Surveys: $130

Add all of your income sources together to find your total cash inflow. In this example, your total cash inflow would be $3,660.12.

List your fixed and variable expenses

Next, you’ll need to add up your monthly expenses. Fixed expenses are those that stay the same per month. Here is an example:

• Rent: $800
• Car Payment: $120
• Gym Membership: $30
• Health Insurance Premium: $200
• Car Insurance Payment: $85.90

Don’t forget to add in variable expenses, too. Here are some examples:

• Groceries: $210.84
• Medical Copays: $100
• Utilities: $112.14
• Fun/Discretionary Expenses: $213.87

Add up all of your expenses to get your total outflow. In this example, your total cash outflow would be $1,872.75.

Subtract your expenses from your income

To get your total cash flow for the month, you need to subtract your expenses from your income. Using the values above, your surplus for the month would be $1,787.37.

Tips for improving your personal cash flow

The example above shows a pretty significant surplus. But what if your personal cash flow statement shows a deficit or a very small surplus?

If you don’t have as much of a surplus as you’d hoped, don’t be discouraged. There are several steps you can take to boost your cash flow.

Reduce your expenses

If you’re already on a shoestring budget, there might not be too much you can cut. But when you make a cash flow statement, it gives you a chance to pinpoint expenses you can eliminate. For example, you might spot a streaming service you don’t use much or decide to limit your dining-out expenses to $100 per month.

Increase your inflow

Not everyone can just get a new, higher-paying job. However, you might be able to identify ways to increase the money you bring in each month, including:

• Volunteering for overtime at work
• Picking up a side job (like rideshare driving or food delivery)
• Selling unwanted items online

Even small increases can make a major difference over time. Every little bit adds up!

Why understanding your cash flow matters

When you understand exactly where your money comes from and where it goes, you’ll be better equipped to increase your surplus each month. But if you ever find yourself in an unexpected deficit, Grant Cash Advance might be able to help.

Our approved users can request cash advances of $25 to $500 in between paychecks. With us, you avoid high-interest options like payday loans. When less of your hard-earned money goes to interest, it’s easier to save for the future. Sign up in minutes today!