Cash Flow Statements are Not Just for Businesses

A cash flow statement sounds like something a business might use. But, individuals and families will benefit too.

Cash flow is all about ensuring you have enough money in the bank to cover all your expenses at the right time. Businesses use cash flow statements to manage their money as a business can be profitable, but still end up failing if they don’t have the cash needed when bills fall due. Hence the proverb “cash is king”.

The same applies to you too. You need to ensure that you always have enough money to pay the rent/ mortgage, utilities, and still buy groceries. Is it time you streamlined your money to make sure you have money when you need it?

What’s a Cash Flow Statement?

A cash flow statement is simply a holistic look at when and where your money is expected to come from (your inflow), and when and where you expect it to disappear to (your outflow) over a set period of time in the future. This is often calculated for a month, as most bills are paid monthly.

The easiest way to create a cashflow is to create a document with all your financial information in one place. On a spreadsheet, have all incoming funds listed first. This could include:

  • Wages and salary
  • Interest from savings
  • Dividends from investments

Make sure all your listed income is net income (i.e. after tax) as cashflow relates to disposable income.

Then, list ALL your outgoings. Things like:

  • Rent/ mortgage
  • Groceries
  • Entertainment
  • Utility bills like NetFlix, Internet, power, water
  • Petrol/ vehicle expenses

Basically, anything you expect to cause money to flow out of your bank account. School fees, takeaways, Uber… everything.

Now, subtract the money going out, from the money coming in the same time period. A positive cash flow (in the black) means you expect to receive more money than you spend (yay!) and have more money than you need that month (which you put into savings, of course). A negative cashflow puts you in the red; you will spend more money than you expect to receive. Sometimes this might be unavoidable, for instance if it’s time to pay your annual insurance or rates bill. Or it could be back to school time with all those associated costs. A cash flow statement will help to remind you not to go crazy at Christmas when back to school costs are about to hit the next month.

Benefits of Good Cash Flow Management

When you have visibility over your expected monetary inflows and outflows you can:

  • See in advance when you have any shortfalls coming up so you can make plans to cover those.
  • Easily compare your real cash flow with your forecast. (Did you miss anything? Or did you blow it with an impulse purchase?)
  • Prioritise your payments.
  • Identify exactly how much you need to set aside (i.e. save!) to meet larger expenditure items or how much of a loan will be required.
  • Plan the timing of larger purchases.
  • Test the likely outcomes of “what if?” scenarios in advance.
  • Make informed and sensible decisions about how much, and when, you’ll spend your money.

Being Mindful of Cashflow

We all have looked at our credit card statement or bank balance and thought ‘HOW? This can’t be right?!’ Then we go through the individual transactions looking for the fraud or incorrect transaction, but they are all legit.


Our modern lifestyles make it so, so, SO easy to spend our money. You don’t need to leave your house in order to buy the things you probably don’t need. Companies understand consumer behavioural psychology and use it sneakily to convince you desperately need something, and then charge the perfect amount so you can justify the purchase to yourself. They may even sign you up to “low” monthly charges that are more expensive in the long term than a one-off purchase, are hard to get rid of, and are so small, you might not even notice them.

This isn’t some article that beats you up, telling you you’re a terrible person for buying a flat white on Fridays. This is you, looking at your spending habits (and potentially your possessions), and thinking well, I could have done without that.

This is about being mindful of your purchases. Looking at your flow of money and maintaining being in the black so you don’t have to experience checkout anxiety (will this payment go through or is it going to be declined?). What this looks like for you will be very different to other people. While it might mean personal budgeting and cutting back expenses, it could also just be about timing or re-routing money. So, take a good close look at your cash flow statement. Are there shortfalls looming on the horizon? Are you going to have to dip into overdraft (with those ridiculous unarranged overdraft fees) every now and again? Can you cover any anticipated increases in outflows (e.g. when your mortgage comes off a fixed rate) or will you need to explore taking some action to make ends meet? If so, review all those anticipated transactions now and make whatever adjustments you need to make.

What Next?

Simply paying attention to what we spend our money on and when we do it can help with your bottom line. Thoughtful spending may genuinely make you happier too. When  you are in control of your money, there is a mental shift that can happen almost imperceptibly; yes, you had to take a look at your finances, but by being mindful of your outflows, you’re changing your focus from the immediate need for cash, to longer term objectives.

Positive Cash Flow Eases Your Mental Load

Money isn’t ‘fair’, and it’s a stressor in everyone’s life. But by regulating your cashflow, you can encourage a sustainable lifestyle with positive cashflow. This gives you options, freedom, and quick responses and solutions to some of life’s problems.

If you want better cash flow—you’ve got the money, but it’s just a hot mess that leaves you overdrawn days before payday—contact us as Smart Advisor. We can help you turn red into black, and set you up for a happier relationship with money.