1. What is Cash Flow?

Cash flow is the net amount of cash being transferred into and out of a business or personal account. It represents the difference between income and expenses over a period of time.

2. How Does the Calculator Work?

The calculator uses the simple cash flow formula:

Where:

• \( \text{Income} \) — Total money received (USD)
• \( \text{Expenses} \) — Total money spent (USD)

Explanation: Positive cash flow indicates more money coming in than going out, while negative cash flow means expenses exceed income.

3. Importance of Cash Flow Calculation

Details: Understanding cash flow is essential for financial planning, budgeting, and ensuring you can meet financial obligations. It helps identify spending patterns and opportunities for savings.

4. Using the Calculator

Tips: Enter your total income and expenses in USD. Both values must be positive numbers. The calculator will show your net cash flow.

5. Frequently Asked Questions (FAQ)

Q1: What counts as income?
A: Income includes salary, wages, bonuses, investment returns, rental income, and any other money you receive.

Q2: What counts as expenses?
A: Expenses include all your spending - bills, groceries, rent/mortgage, entertainment, transportation, etc.

Q3: What is a good cash flow?
A: Positive cash flow is generally good, meaning you're living within your means. The higher the positive number, the more you can save or invest.

Q4: What if I have negative cash flow?
A: Negative cash flow means you're spending more than you earn. You may need to reduce expenses or increase income to avoid debt.

Q5: Should I calculate this monthly or yearly?
A: Both are useful. Monthly helps with budgeting, while yearly gives a bigger picture of your financial health.