Stock Preacher

The last step is creating cash flow statement so that you can see how your money moves and how much comes in and how much goes out and where it goes.

Plus the amount of your total income (Listing your Income), Total Expense (Your outgo) into the table show below to see your cash flow. Do you have positive cash flow – more coming in than going out – so that you can start investing in stock or are expense overpowering your income? Doing a cash flow statement isn’t just about finding money in your financial situation to fund your stock program. First and foremost, it’s about your financial well-being. Are you managing your finances well or not?

Looking at Your CashFlow

Personal debt in expenses far exceeded whatever income they generated. That announcement is another reminder to watch your cash flow; keep your income growing and your expense and debt as low as possible.

Analyzing your Cash Flow

Use your cash flow statement to identify sources of funds for you investment program. The more you can increase your income and the more you can decrease your outgo, the better. Scrutinize your data. Where can you improve the result? Here are some question to ask yourself:

How can you increase your income? Do you have hobbies, interests, or skills that can generate extra cash for you?

Can you get more paid overtime at work? How about a promotion or a job change?

Where cna you cut expense?

Have you categorized your expense as either “necessary ” or “nonessential”?

Can you lower your debt payments by refinancing or consolidating loans and credit card balances?

Have you shopped around for lower insurance or telephone rates?

Have you analyzed your tax withholdings in your paycheck to make sure that you are not overpaying your taxes

Finding investment money in tax savings

According to the Tax Foundation, the average U.S. citizen pays more in taxes that in food, clothing and shelter combined. Sit down with your tax advisor and try to find ways to reduce your taxes. A home-base business for example is a great way to gain new income and increase your tax deductions, resulting in a lower tax burden. Your tax advisor can make recommendations that work for you.

One tax strategy to consider is doing your stock investing in a tax-sheltered account such as a traditional Individual Retirement Account (IRA) or a Roth Individual Retirement Account. Again check with your tax advisor for deductions and strategies available to you. For more on the tax implications of stockinvesting keep reading our article at http://www.stockpreacher.com

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Adding up your outgo

Using table below as a worksheet, list and calculate the money that’s going out. What are you spending and on what? The first column describes the source of the expense, the second column indicates the monthly amount, and the third column shows the amount projected for a full year. Include all the money you spend, including credit card an other debt payments; household expense such as food, utility bills, and medical expense; and money spend for nonessential expense such as video games and wii fit.

Payroll taxes is just a category in which to lump all various taxes that the government takes out of your paycheck. Feel free to put each individual tax on its own line if you prefer. The important thing is creating a comprehensive list that is meaningful to you. You may notice that the outgo doesn’t include items such as payment to a 401(k) plan and other saving vehicles. Yes, these items do impact your cash flow, but they are not expenses; the amounts that you invest are essentially assets that benefit our financial situation versus an expense that doesn’t help you build wealth. To account for the 401(k), simply deduct if from the gross pay is $2000 and your 401(k) contribution is $300, then use $1700 as your income figure.

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With a cash flow statement you ask yourself three question:

What money is coming In? In your cash flow statement, jot down all sources of income. Calculate it for the month and then for the year. Include everything, including salary, wages, interest, dividends, and so on. Add them all up and get your grand total income.

What is your outgo? Write down all the things that you spend money on. List all your expenses. If possible, categories them into essential and nonessential. You can get an idea of all the expenses that you can reduce without affecting your lifestyle. But before you do that, make as complete a list as possible of what you spend your money on.

What’s left? If you income is greater than your outgo, then you have money ready and available for stock investing. No matter how small the amount seems. it definitely helps. I ‘ve seen fortunes built when people stated to diligently invest as little as $25 to $50 per week or per month. If you outgo is greater than your income, then you better sharpen your pencil. Cut down on nonessential spending and increase your income. If you budget is a little tight, hold off on your stock investing until your cash flow improves.

Tallying up your income

Using table below as a worksheet, list and calculate the money you have coming in. The first column describes the source of the money. The second column indicates the monthly amount from each repectvie source, and the last column indicates the amount projected for a full year. Include all income, such as wages, business income, dvidiends, interest income, and so on. Then project these amounts for a year and enter those amounts in the third column.

Listing your Income

This is the amount of money you have to work with. To ensure your financial health, don’t spend more than this amount. Always be aware of and carefully manage your income.

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If you are going to invest money in penny stocks, the first thing you need is MONEY! Where can you get that money? If you are waiting for an inheritance to come through, you may have to wait a long time, considering all the advances being made in healthcare lately, What’s that? You were going to invest in healthcare stocks? How ironic. Yet, the challenge still comes down to how to fund your stock program.

Many investors can reallocate their investment and assets to do the trick Reallocating simply means selling some investments or other assets and reinvesting that money into stocks. It boils down to deciding what investment or asset you can sell or liquidate. Generally, you want to consider those investments and assets that give you a low return on your money ( or no return at all). If yo have a complicated mix of investment and assets, you may want to consider reviewing your options with a financial planner. Reallocation is just part of the answer; you cash flow is the other part

Ever wonder why there’s so much month left at the end of the money? Consider your cash flow. You cash flow refers to what money is coming in and what money is being spent. The net result is either a positive cash flow or a negative cash flow, depanding on your cash management skills. Maintaning a postive cash flow helps you increase your net worth. A negative cash flow ultimately deplets your wealth and wipes out your net worth if you don’t turn it around immediately. The following article show you how to analyze your cash flow. The first step is to do a cash flow statement.

On our next article we will show you the cash flow statement

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