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What is cash flow

What is Cash Flow

what is positive cashflow and negative cash flow

Is cash flow actually money falling from a tree?

Not quite.

But it illustrates one part of what cash flow means, which is cash flowing in towards you.

The opposite of cash flowing in, is cash flowing out or away from you.

Since this is supposed to be an easy to understand dictionary of terms, lets get onto the ground level of the meaning.

In laymen terms cash flow is a term that describes how much money flows in and how much money is spent on a monthly basis for one individual or a company.

What is positive Cash Flow

An example of positive cashflow is when your paycheck and other monthly income you recieve is bigger then the money you spend during that month.

Having multiple income sources usually helps to keep a positive cash flow and you should always strive to keep it like that.

What is negative Cash Flow​

Contrary a negative cash flow means that your monthly spendings because of various recurring monthly bills like your phone, electricity, rent, maybe a loan you took, are higher then your income for that month.

If that happens, it means you will likely have to use your savings or ask someone to help you cover those expenses.

In general, you should always strive to have a positive cash flow.

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