Day 4: Monthly Cash Flow (30 Day Financial Wellness Challenge)

Are you living within your means?

Day 4: Monthly Cash Flow (30 Day Financial Wellness Challenge)Welcome to Day 4 of the 30-Day Financial Wellness Challenge.

Each day will comprise of financial exercises, some short and others a bit longer, to help you become financially fit. The goal is to tackle different aspects of personal finances one day at a time.

After the 30 days, you’ll have a stronger understanding of your financial health and an action plan to improve your financial wellbeing. Review Day 3: Expense Statement.

On Day 4, we’re calculating your monthly personal cash flow.

What is personal cash flow?

Cash flow is a significant part of the budgeting process. It details the movement of money in and out of your pocket and bank accounts within a one-month period. Your cash flow number is an important financial health indicator that determines how successful you’ll be in achieving your goals.

Cash Flow: Are you living within your means?

By calculating your cash flow you’re able to determine if you’re living above, below or within your means. It doesn’t matter how big your salary is or how much money you make each pay period if everything is spent on a monthly basis. Doing so leaves nothing left to save, pay off debt, invest, and build assets.

How to calculate your monthly cash flow

Cash flow is a measure of the money you receive and spend on a per month basis. It’s best viewed with an equation:

Total Monthly Income – Total Monthly Expenses = Cash Flow

Calculating your cash flow includes:

  1. Monthly Income – such as from salary, bonus, interest, dividends and capital gains or proceeds from sales. For wages or salaries, use your net pay (after taxes and contributions). Covered on Day 2 when calculating Your Income Number.
  2. Monthly Expenses – such as fixed and variable or what I discussed as bills, debt, and discretionary spending. This was covered on Day 3 when creating your Expense Statement.

To calculate your Cash Flow number, take your Total Monthly Income and subtract your Total Monthly Expenses. Use the results from Day 2 and Day 3 exercises to help you complete today’s exercise.

What calculating your cash flow reveals?

Your cash flow number increases financial awareness and leads to actionable takeaways. If your cash flow is positive, then you have extra money to put towards financial goals. If your cash flow is negative, it may be time to cut back on expenses and increase income.

Day 4 Assignment

Let’s calculate your monthly cash flow

  1. Use Total Net Monthly Income from Your Income Number calculation
  2. Use Monthly Expenses from Your Expense Statement
Monthly Cash Flow
   Total Net Monthly Income $
   – Total Monthy Expenses $
   = Cash Flow  $

Answer the following questions:

  • What does your cash flow reveal about your financial situation?
  • How do you feel about your number?
  • Are there areas for improvement and action-taking?

Cash Flow Example

Below is an example of how you can calculate your cash flow if you decided to skip Day 2 and Day 3.

 Monthly Income
  Primary Job (net-pay) $ 3,166.66
  Side Gig (pre-tax) $ 500.00 Extra Cash
  Interest (savings) $ 26.56
 Total Monthly Income  $ 3,693.22
Monthly Expenses
  Rent $ 1,000.00
  Utilities $ 250.00
  Cellphone $ 100.00
  Transporation $ 400.00
  Dining Out $ 150.00
  Groceries/Household $ 300.00
  Savings Goals $ 750.00 Emergency Savings
  Debt Payments $ 300.00 Student Loans
Total Monthly Expenses  $ 3,250.00
Cash Flow $ 443.22 Positive Cash Flow

Cash Flow Calculation Tips

  • Use your net-income from wages and salaries, not the gross amount.

Why is calculating Your Income important?

  • Know how your money is being spent on a monthly basis. This helps you discover if your income supports your lifestyle.
  • With positive cash flow, you can rest assured knowing you’re able to afford your monthly expenses and have money left to put towards additional goals.
  • With negative cash flow, you can determine what expenses to cut and reduce along with strategizing ways to increase income.

Further Reading:


  • Personal Capital is a free personal finance app with a 360-degree view of your money. With Personal Capital, you can see all your accounts in one place with planning and analysis tools.

Next Daily Challenge: Day 5 – Your Savings Rate: Are you saving enough?


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