Money Matters:  Financial Independence


By Christopher F. Cave, Financial Advisor

Money comes in and goes out every month. Where it comes from and where it goes we refer to as your cash flow. This information is important to document in order to make you aware of all of your sources of income, your spending habits and to show where money may be saved. Use the following worksheet to illustrate your cash flow: 

Where it Comes From Where It goes
  $Annual Amount   $Annual Amount
Family Support   Family Support  
Salary   Income Tax  
Bonus and Commissions   Mortgage or Rent  
Freelance Consulting   Property Taxes  
Dividends   Utilities  
Interest   Auto Maintenance  
Rent   Commuting/other Transp.  
Social Security   Insurance  
Pensions     Automobile  
Annuities   Homeowner's or Renter's  
Tax Refunds   Life  
Other   Health  

Total Inflow

  Child Care  
Club Dues  
Medical Expenses  
Household Misc.  
Home Improvements  
Magazines, Books  
Contributions to Charities    

Total Outflow


Total Inflow
Minus Outflow  
Surplus or Deficit  

Once your net worth and cash flow sheets have been filled out you should have a pretty good idea of your financial inventory. Use this information to find where you can curb our spending habits enough in order to save 10%-15% of your total income. 

This is now your budget. Stick to it! 

The money you put away will be invested in order to reach your short and long-term financial goals. Where to put this money depends on factors such as time horizon, risk tolerance etc. and will be discussed in subsequent articles. 

Remember, if you don't put money away today, there won't be any saved for tomorrow.

Bio and more articles by Christopher F. Cave, Financial Advisor