cash flowCreating a cash flow statement is similar to the Building a Balance Sheet Practice I introduced last week. Draw a line in the middle of a page. Title the left column “Income,” and list all the income you receive each month from work, social security, your business, investment dividends, and so on. At the bottom, add up the amounts and write the total.

Title the right column “Expenses,” and list all of your monthly expenses, such as rent or mortgage, food, gas, insurance payments, utilities, charitable donations, and so on. For annual expenses like property taxes, divide them by twelve. At the bottom of this column, add up those figures and write the total.

Subtract your expenses from your income. If the difference is a negative number, start strategizing how to stop spending > you earn today!

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