Amid evolving news + uncertainty surrounding COVID-19, your financial needs are our top priority.
For individual financial information, click here.
For Small Businesses, including the Paycheck Protection Program (PPP), click here.

Using a Personal Cash Flow Statement

October 16, 2020 · 6 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

Using a Personal Cash Flow Statement

When payday hits, a bank account flush with cash can make it feel like there’s not a care in the world. Treat yourself to a new pair of shoes? Why not? In need of a new ’do? Head to the salon for a cut and color.

Is your favorite band passing through town? Gather a group of friends and hit the town for a night of good music and great memories.

You work hard for your money, so at the end of the day, you want to spend it on purchases and experiences that will make you happy. But if you are blazing through cash faster than it’s coming in, you could be headed for a slippery slope.

A personal cash flow statement could be the tool that allows you to take a quick temperature check on your spending habits.

What Is a Personal Cash Flow Statement?

“Cash flow” is a term commonly used by businesses to detail the amount of money flowing in and out of a company. Companies can use cash flow statements to determine how well the company is generating cash to pay its debts and operating expenses.

Likewise, tracking your own cash flow might give you a benchmark for your personal spending with a quick visual of how much money you have left at the end of each month. If the total is less than you anticipated, you’ll be ready to make some changes.

And thanks to your hard work and diligence creating your personal cash flow statement, you could accurately measure your progress as you make changes to your spending habits.

So, how do you set up a personal finance cash flow statement? It might seem intimidating to get started, but these ideas could help streamline the process.

Tracking Sources of Income

One place to start when building a cash flow statement is tallying up various sources of income. There are several ways to compile this information—you could grab a paper and pencil and add it all up manually, or you could opt for a more modern approach and use a spreadsheet to organize it all. Pick a time frame to analyze personal cash flow—this could be done annually, quarterly, or monthly.

Any paychecks and bonuses you are anticipating could be included. If you have a variable income, perhaps because your work is based on commission or maybe you are self-employed, you could fill in an average of the past six or 12 months of pay. A handy form
could help to make sure you’re not missing anything, as well.

A cash flow statement generally will also list any income beyond the money you earn from your day job. Consider expanding your calculations to include any money you make from side hustles plus passive income streams like any money you make off of a rental property.

Since a cash flow statement is designed to give a snapshot into the overall flow of where your money is coming from and where it is going, you might want to avoid listing money in accounts that aren’t available for spending.

For example, dividends and capital gains from investment accounts are sometimes included in a personal cash flow statement, but they usually wouldn’t be included if they are being automatically reinvested or are part of a retirement account from which you aren’t actively taking withdrawals.

You could also factor in any other income, such as a pension or Social Security benefits. If you’re anticipating any gifts, refunds, or additional income from other sources, you could include that as well.

Printing out copies of statements from your various accounts could serve as a tool to help guide you as you add up your various sources of income. Once you’ve collected all of your sources of income, you can calculate the total.

Tracking Expenses

Now that you know how much money is coming in each month, you could start collecting data on how much is being spent during that time period. When it comes to tracking your expenses, there are typically two categories—fixed and variable expenses.

Fixed expenses are costs that generally don’t vary from month to month. Variable expenses will likely change every month—think of things like gas, clothing, or dining out.

Again, printing statements for your various accounts could be beneficial as you start to calculate your monthly expenses, like your credit card statement and any debts, including a mortgage, auto loan, or student loans.

Your goal might be to create a complete picture of how much of your money is flowing out each month, so consider including necessities like food and gas, and also more discretionary expenses such as trips to the nail salon or your monthly video streaming subscription.

Small expenses can add up quickly, so you might want to be precise. Pennies could make a difference when determining how much money is staying in your account. Once you’ve compiled all of your expenses, you can calculate the total.

Calculating the Difference

Some simple math will allow you to calculate your net cash flow—just subtract the sum of all of your expenses from the sum of your income. The result is your net cash flow. A positive number means you have a surplus, while a negative means you have a deficit in your budget.

A positive cash flow is desirable since it can provide more flexibility—you get to decide how to best use the surplus.

There are a variety of options—you could choose to save for an upcoming expense, make additional contributions to your retirement fund, or even consider splurging on yourself.

A negative cash flow could be an indicator that you are living a more expensive life than your income can support. In the future, maintaining this habit could lead to additional debt.

While it is possible to have a net neutral cash flow (all money coming in and going out is equal, down to the penny) it could be a difficult prospect with variable income and/or expenses.

How Is Budgeting Different From a Personal Cash Flow Statement?

A cash flow statement provides a comprehensive look at overall spending habits. It could give you insight into how you’re spending money and even where you are spending.

A budget, on the other hand, outlines a spending plan based on that personal cash flow statement. After you’ve completed your cash flow statement, that information could be used to set a budget or to refine an existing budget.

As you make changes to your budget, this could be a good opportunity to check in with your financial goals. Are you on track for saving for retirement? Do you want to amp up your emergency fund?

Are you interested in finally tackling the credit card debt that has been slowly accruing interest? Perhaps you want to work toward paying off your student loans. Whatever your goal, a well-crafted budget could serve as a roadmap to help you get there.

Improving Cash Flow and Developing a Budget

Do you notice any spending patterns when you look through your personal cash flow statement? You could take a look at where you’re spending your money to see if there are any areas to make changes.

Everyone has their own spending vices and tracking your spending could be one way to get a handle on yours. Perhaps you spend more money on entertainment than you thought. Between premium cable, Netflix, Hulu, and weekly trips to the movie theater, maybe you’re spending twice as much as you thought you were.

Are you willing to become a cord-cutter to save on that expense? You could play around with your budget to see if there are other areas where you can cut down your monthly expenses.

There may also be opportunities to negotiate lower rates too. Some payments aren’t as set in stone as they may seem.

Could you potentially bundle your cable and internet for a lower rate? If an unexpected injury led to an expensive hospital stay, could you negotiate the medical bills?

Beyond cutting your expenses, increasing the money coming in could lead to an improved cash flow. One place to explore increasing your income is at your job. Could you ask for a raise? If that’s not an option, are you able to find an additional income stream through some sort of side hustle?

What about your skills and interests? Are you an accomplished writer or graphic designer? Could you sell your skills as a freelance photographer? Are you an avid knitter? Even a hobby could lead to a little bit of additional income.

Some side hustles could bring in passive income and may not even require a large time commitment. Do you have a spare room in your home that you could rent out?

When you’re ready to create a budget, there are a variety of resources online, from apps, like SoFi Relay, to spreadsheet templates and printable worksheets. Your personal style will help determine which option is best for you.

You could use your budget to set spending goals and determine how much money you’ll save each month. Ideally, a budget is a tool that could help you meet your financial goals and encourage positive spending habits.

Sticking to a Budget

A budget is no good if you don’t use it, so as you set up your spending categories, you might want to make sure they are realistic for you and your goals. One common rule of thumb is the 50/20/30 rule.

When you break it down, this rule offers three guidelines for spending: 50% of income toward essentials and necessities, 20% toward savings, and 30% toward discretionary spending. This can help you to work toward your budgeting goals without being overly strict or creating a budget with endless rows of expenses.

It’s not a bad idea to occasionally check in with your budget to make sure you’re on track for spending and compare your actual spending with your budget to make adjustments as needed. If it helps, don’t think of a budget as restrictive.

Sure, you’re creating spending limits, but it may also help you feel empowered to spend on things that are important to you.

Track Your Spending With SoFi Money

If you need help with tracking your spending, a SoFi Money® cash management account may be a good option for you. With SoFi Money, you can see your weekly spending on your dashboard to help you stay on top of what you are spending and if you are on track with your budget.

Learn more about how SoFi Money could jumpstart your financial management.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . The umbrella term “SoFi Invest” refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.

SOMN19163

All your finances.
All in one app.

App Store rating

Download on the App Store
Get it on Google Play

TLS 1.2 Encrypted
Equal Housing Lender