Cash can do two things…go in one pocket and out the other pocket. This is simply known as cash flow – and it’s huge to know about.

Every one seems to talk about the subject of money, but not necessarily in the right context.

For example, getting out of debt can actually decrease cash. By paying higher payments or accelerating payments, more cash actually leaves the pocket thus decreasing cash flow. On the contrary, once everything is paid off, cash flow would increase once again increase. In the mean time, and before the loans are paid in full, the bank has had increased cash flow. Notice who has more money at the end of the day? The bank.

Actually, many people probably don’t talk about cash flow until times are hard – then, it may be too late.

Take a look at taxes since tax day is coming. People pay estimates all year long and hopefully get a refund, right? Taxpayers have given increased cash flow to the government to use based upon estimated net income. Getting a refund means sending too much money to Uncle Sam.

Have you noticed we don’t get money back quickly? This limits the cash flow to us.

In a business plan, cash flow projections are huge. Why? Money coming in versus outgoing to operate the business.

Why don’t more people think like this personally?

Many people from politicians to talk shows blame business, banks, loans, regulators, etc. all day long, but what about education? Why not make bookkeeping or accounting mandatory in public schools? (Probably so people won’t pay attention to money matters and look to government for help seems to be the trend and maybe the agenda as well.)

Even by not doing anything with the money and sticking it under the mattress, this money goes out your pocket. How so? Inflation.

My kids and I like apple pie. One year the pie cost $1. The next year, the pie cost $1.09 and they are out of luck if all they had was a dollar.

What’s the main point here? Keep cash working in our favor.

If you are going to “pay” alot of something, make sure it’s attention. Otherwise, the money is moving out from one pocket instead into the other.

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