Why Prepare a Personal Cash Flow Statement?

Controlling your financial affairs requires a budget or cash flow statement. Budgeting and tracking your expenses gives you a strong sense of where your money goes and can help you reach your financial goals, whether they are saving for a down payment on a house, starting a college or university fund for your
children, buying a new car, paying off the credit cards or planning for retirement. A cash flow statement provides you with the following benefits:

1. Know where you stand - A cash flow statement allows you to know exactly how much money you have. The statement shows you how your funds are allocated, how they are working for you, what your plans are for them, and how far along you
are toward reaching your goals.

2. Communication - A budget is a communication tool with other family members to discuss the priorities for where your money should be spent.

3. Control - A budget is the key to enabling you to take charge of your finances. With a budget, you have the tools to decide exactly what is going to happen to your hard-earned money—and when.

4. Identify opportunities - Knowing the exact state of your personal monetary affairs, and being in control of them, allows you to take advantage of opportunities that you might otherwise miss.

5. Extra money - A budget may produce extra money for you to do with as you wish. Hidden fees and lost interest paid to outsiders may be eliminated. Unnecessary expenditures, once identified, can be stripped out. Savings, even small ones, can be invested and made to work for you.

6. Other benefits:

• Indicate your ability to save and invest
• Let you analyze your standard of living
• Indicate if you’re living within or beyond your means
• Highlight any problem areas