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Cash Flow
Definition
Cash flow is the net amount of money moving into and out of an individual's or business's accounts over a period of time.
Explanation
Positive cash flow means more money comes in than goes out. Negative cash flow indicates spending exceeds income. Cash flow analysis reveals whether your financial habits are sustainable. Improving cash flow involves increasing income, decreasing expenses, or both.
Cash flow is different from net worth: cash flow measures the monthly surplus or deficit, while net worth measures total assets minus liabilities.
Example
A monthly cash flow of $500 positive means you can save $6,000 per year; negative $200 monthly means you're going into debt by $2,400 annually.