Cash Flow Planning: It’s More Than a Budget

Cash flow planning can help you determine how much you need to save for your children’s education, your retirement, or any long-term financial objective. It is important to keep in mind that a household can have a weak cash flow but still be in good financial health when: (1) job related cash flow is increasing and expenses are decreasing, (2) negative cash flow was due to paying off debt and (3) making capital expenditures will eventually provide increased cash flow for the household.

Some people consider themselves wealthy because they can live in a very expensive house and travel when they feel like it. Others believe that they are wealthy if they can pay their bills on time. The way I define a wealthy person is someone having over $1 million in investable assets. In other words, the value of your home is not included in the definition of a millionaire.

Wealth is being in possession of material goods above and beyond what is actually needed to fulfill an individual’s needs and having so much money after purchasing excessive material goods that it can accrue interest until there is so much that it would be difficult for a person to spend it in one lifetime without being wasteful or extravagant.

If you do not have great inherited wealth you will likely have to do three things over a 40 to 50 year period: (1) you will need to make money, (2) you will need to save money, and (3) you will need to invest money. Overall, wealth is equated to money. However, it also encompasses many other aspects such as power, status, and individuality.

About ksindell

Kathleen Sindell, Ph.D. is the author of numerous academic, popular, and professional finance articles, Web sites, proposals, and books. This includes the bestselling reference book, "Investing Online for Dummies, Eds 1-5" (listed for two consecutive years on the Wall Street Journal's Bestselling Business Book List). Her most recent book "Social Security: Maximize your Benefits" has been listed in Amazon's Top 100 Bestselling Retirement Planning Books. It is important to note that "Social Security: Maximize Your Benefits, 2nd Edition" was just released. Sindell has an in-depth understanding of the financial services industry and has held Series 7, 63, and 65 licenses. Dr. Sindell is regularly tapped as a financial services expert on ABC World News, The Nightly Business Report, and at popular online and print outlets. Kathleen Sindell, Ph.D. is a member of the Board of Directors for the Financial Planning Association, National Capital Area (FPA NCA), is on the Editorial Advisory Panel of the Journal of Financial Planning, and is Co-Chair of the Metro Washington Financial Planning Day. Sindell is a Course Chair II, CFP Program Academic Officer, and adjunct full-professor at the University of Maryland, UMUC, School of Undergraduate Studies. Contact Information: ksindell@kathleensindell.com or 703-299-1700
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