Friday, October 23, 2009

Cash Flow Diagram

Cash flow diagram is used to find out where your money go to when you got your pay. The above is the cash flow diagram that I have designed for myself. Of course, I have taken out the exact amount in each item.

Cash flow is basically what you get after deducting your expenses from your pay. Those people who have a lot of liabilities are more likely to have less cash flow or even worse, negative cash flow. Remember in my last post, I say reduce your liabilities and increase your assets is the way to be rich!!! I have put part of the money in cash flow to saving and another part into buying assets.

Re-investment of money received from the passive income is very important. By doing that you can compound the growth of your money . If you do it properly, you can achieve financial freedom faster.

I also draw out My Cash Flow Framework , which has more details than my cash flow diagram.

1 comment:

John Smith said...

Thank you for sharing such informative and interesting article.

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