Managing our Cash Flow

Below are some of the basic terms pertaining to Cash Flow :
1) Income - Money that we earned through salary, bonus, dividends, commission, profit, interests...
2) Expenses - Money that we spent on housing, food, transport, clothing, entertainment...
3) Assets - These are physical items that can be either Positive Cash Flow OR Negative Cash Flow.

Example of Positive cash assets are stocks (equity), bonds, funds, fixed deposits and business and Negative cash assets would be luxury housing, flashy cars, country clubs and credit cards.

Management of Cash Flow - Poor 
The poor are most likely to spend whatever they earn and hardly save and invest on their saving. They have no financial planning and if they are retrenched or pay cut, it is tedious to survive.

Management of Cash Flow - Average (Middle)
Beside taking care of their usual expenses, the average or middle class will tend to spend their saving on negative cash assets. They may appear wealthy but they will suffer just like the poor if they loose their job or having pay cut.

Management of Cash Flow - Rich
The rich will invest in positive cash assets and spend on negative cash assets. They are able to save, invest wisely and generating sufficient passive income to cover their expenses.

Rule of Thumb - If we cannot increase our INCOME, please reduce our EXPENSES.
                        - SAVE a portion of our income and INVEST wisely.