Sometimes, just looking at your net earnings or how much your income exceeds your expenses is not enough to tell you whether you can afford to buy that dress or even pay for that monthly payment for a new car.
If your child for example comes to you and says that he wants to go on a school excursion which will cost $100 payable up front, you don’t need to know how much your income exceeds your expenses, you need to know how much spare cash you have! Say your monthly income exceeds your expenses by only $50, maybe you cannot afford the school excursion. If part of your expenses this month is a $50 invoice from a printer that is not payable until next month however, then you still have $100 positive cash flow for this month and can pay for the school excursion now and can pay the printer next month. Everyone will be happy.
Similarly, If you want to buy a car on finance, you need to know about your cash flow, not just your surplus income. If your monthly income exceeds your expenses by $2000, maybe you can afford the car payments, but if I you are already committed on a $2000 monthly housing mortgage repayment, you cannot.
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Additional Reading:
https://www.bluecoinsapp.com/cashflow/