general
Cash Flow
Cash flow is the net movement of money in and out over a period. Positive cash flow (income exceeds expenses) is the foundation of wealth building. Negative cash flow means you're spending more than you earn.
Monthly cash flow = take-home pay − all expenses and debt payments. Positive cash flow is what you have available to save, invest, or pay down debt. Many high-income earners have poor cash flow due to lifestyle inflation.
Real estate investors use cash flow to evaluate rental properties: monthly rent minus mortgage, taxes, insurance, maintenance, and vacancy = net cash flow per month.
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- Budget
- A budget is a plan that allocates expected income to expenses, savings, and investments over a set period. It is the foundational tool of personal finance — you cannot consistently save or invest without knowing where your money goes.
- Savings Rate
- Your savings rate is the percentage of your income you save and invest rather than spend. It is the single most powerful lever for reaching financial independence — more important than investment returns for most people.
- Net Worth
- Net worth is the total value of everything you own (assets) minus everything you owe (liabilities). It is the most comprehensive single-number measure of financial health.
Frequently asked questions
What is Cash Flow?
Cash flow is the net movement of money in and out over a period. Positive cash flow (income exceeds expenses) is the foundation of wealth building. Negative cash flow means you're spending more than you earn.