Your cash flow is simply the money going into your pocket and out again. It is matching up your income with your expenses. Sounds simple doesn't it? It really is, but very few people take the time to keep track of what actually comes in and goes out each month.

Credit Card Debt	$ Select One 0 1 - 2,499 2,500 - 4,999 5,000 - 7,499 7,500 - 9,999 10,000 - 12,499 12,500 - 14,999 15,000 - 19,999 20,000 - 29,999 30,000 - 39,999 40,000 - 49,999 50000+
Other Unsecured Debt	$ Select One 0 1 - 2,499 2,500 - 4,999 5,000 - 7,499 7,500 - 9,999 10,000 - 12,499 12,500 - 14,999 15,000 - 19,999 20,000 - 29,999 30,000 - 39,999 40,000 - 49,999 50000+
Number of Creditors	Select One 2 3 4+
Status of Bill Payments	Select One Up to Date About to Fall Behind 1 Month Behind 2 or More Months Behind
I want to	Select One Eliminate My Debt Consolidate My Debt Seek Advice
Own a Home?	Yes  No

The second worksheet with this lesson is called "Income and Expenses." For the most accurate look at your budget, expenses and income for an entire year should be done. That's really a lot of work! But, just to get you started learning what records you will need, this worksheet provides space for two months. When you see how important it is to keep these records, you may want to contact the Extension office and purchase a Home Account Book for continuous recordkeeping.

The first thing you will need to do is take the time to collect all of your bills, receipts and check ledger which will help you monitor your spending for the month. (It could be last month's, this months, or both.) Include both fixed and flexible expenses. Do you know the difference ?

FIXED expenses are items such as rent, mortgage, car payment and other regular installment payments that basically stay the same each month and for which you are committed for a period of time.

FLEXIBLE expenses are the expenses that change from month to month such as food, clothing, utilities. You have a bit more control over some of these items.

If you have recently become self-supporting, or are starting a household for the first time, it may be difficult finding complete records. Do the best you can for now and start keeping track of as many expenses as you can. The more accurate and complete the worksheet, the easier and more effective your financial planning will be.

The Bottom Line

If your income exceeds expenses, you will have money to put into a savings plan to use towards achieving your financial goals. However, if income does not cover all expenses, see what you might do to increase your income or decrease your expenses. Take a look at your budget to see if you can find some spending leaks. We'll be discussing this problem in an upcoming lesson.

The most critical time to try and control fixed expenses is before you commit to the obligation. Are there other options you need to consider? Is there a way for you to reduce some of your flexible expenses?

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