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 Canaccord Genuity Corp.

Spring cleaning: Do you have visibility over your cash flow?

Evan Davies - May 24, 2022
Do you know how much you spent last year?

If so, how much was spent on each type of expenditure?  While we may have good visibility over our income, many of us may not have a clear picture of where our funds are going. In fact, a recent study suggests that the majority of people have no idea how much money they spent in the last month alone.

 

Regardless of your life stage or income level, creating a personal cash flow statement can be a valuable exercise. In a basic sense, it is a snapshot over a certain period of time of your sources of income – your inflows – and your expenditures mapped out in categories – your outflows.

 

Your personal cash flow is generally your income minus your expenses, which equals your savings for that period of time (or the debt you accrue if your expenses exceed your income). This experience may an eye-opening one. You may discover that your expenses aren’t exactly what you thought. Having greater visibility over your inflows and outflows can also help you to plan and think proactively about how to better use funds or balance different spending priorities.

 

For spouses, it can help to provide congruency over spending decisions. This exercise may also play an important part in planning for the future or preparing for retirement. After all, it is difficult to determine how much money might be needed later in life without having a comprehensive understanding of how much is being spent today.

 

To learn how to get started click here to download a PDF version of the full resource.