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How to increase your personal cash flow [The perfect guide]

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Personal Finance is how a person manages cash, savings, and investments. It includes terms such as budgeting, retirement planning, banking, insurance, investments, and mortgages. Personal finance can also indicate the entire industry that gives financial services to individuals and households. They also support people in need of financial and investment advice. How to increase your personal cash flow? Well, that’s the question we are going to answer.

Most of us tend to look at our monthly expenses, credit card statements, and bank balance and become surprised. Most of the time, we have spent more than we expected. To overcome this problem, we can use a simple accounting technique called ‘personal financial statements.’ These financial statements are similar to those used by large organizations. An individual can obtain an insight into their financial condition, which will help plan the budget. 

Cash and cash flow are two different terms. Money is a static asset. Hence cash flow will depict where the money is moving.

There are two main personal financial statements, namely personal cash flow statements and personal balance sheets. 

Cash Flow Statement and Personal Finance 

Personal Cash Flow Statement usually measures the cash inflows and outflows. It is a cash flow analysis. It helps a person to understand the net cash flow for a specified period. Examples of cash inflows are salaries, bank interests, dividends from investments done, etc.

Another example of cash inflow can be capital gain received by selling assets such as vehicles or houses. Cash outflows include expenses of all sizes. Examples of cash outflows are utility bills, payments of rents and mortgages, expenses on goods, etc.  

The principal objective of understanding one’s cash inflow and outflow is to calculate the net cash flow. You can subtract cash outflows from cash inflows to obtain net cash flow. If the net cash flow is positive, it shows that your income is higher than your expenses. A negative cash flow depicts aka higher spending compared to your income. 

Preparing a personal cash flow statement

Preparing a cash flow statement is like making a budget.

  • First, you need to start recording all your income and expenses.
  • Make a note of all your income, including salary and any other monthly income.
  • Also, you need to track all your expenses, such as bill payments, purchase of goods, etc. 

It is essential to account for both regular and irregular income in the cash flow statement. The cash flow statement needs to have all your sources of income apart from the monthly salary. Some examples are commissions, self-employment income, dividends, interests, etc. 

Moreover, it is required to record all the regular and irregular expenses in the cash flow statement. Some examples are insurance payments, medical bills, groceries, etc. 

Then you can add the total income and expenses. It is okay if your cash flow statement has a definite figure. An influential figure depicts that you have some cash left to reach your financial objectives.

A negative cash flow statement shows a weak financial position. Then you will have to seek ways to reduce your expenses and engage in savings. 

Benefits of a personal cash flow statement 

The personal cash flow statement provides you with a clear understanding of where the cash is flowing. It will offer you immense clarity on your cash inflows, outflows, and net cash flow. This understanding helps you to group the cash inflows and outflows in an orderly manner. It will give you a quick snapshot of how much of the total earnings you spend on specific activities. 

A robust personal cash flow statement is a reflection of whether you are worth something or not. An increasingly positive cash flow statement over a few years depicts that you are improving your financial status. So this is one of the ideal methods to follow if you are wondering how to increase your personal cash flow

Moreover, a personal cash flow statement allows a person to initiate corrective actions to overcome any financial burden. A person can start with a negative cash flow statement and improve it over time. 

Besides, a cash flow statement also depicts how much buffer you have in your cash flow. It helps you to understand how much recurring cash flow a person can take on. This statement also helps a person visualize how fast they can enhance wealth, and this is because they can understand where they can cut back unnecessary spending. 

One of the significant advantages of a personal cash flow statement is the ability to set financial goals. Setting short and long-term financial goals is mandatory for a person’s financial success. Achievement of financial goals can be done through personal cash flow statements. Furthermore, this is an ideal tool to figure out whether significant life changes will work out. 

What is the Personal Balance Sheet? 

A personal Balance Sheet is the next primary type of personal financial statement. The sheet will give you an idea of your total wealth within a specific period. It is a concise summary of a person’s assets, liabilities, and net worth. 


There are three main types of assets.

  • Liquid Assets 

Liquid assets can be defined as things owned by a person converted to cash easily by selling. Examples of liquid assets are money market accounts, checking accounts, savings accounts, and raw cash. 

  • Large Assets 

Examples of substantial assets are houses, vehicles, furniture, etc. Considering the market value of these items is necessary when preparing the balance sheet. You can use the nearest sale prices of similar pieces if you find it challenging to figure out the market price.

  • Investments 

Examples of investments are bonds, stocks, mutual funds, and real estate. Similar to the above, using current market values is mandatory when recording expenditures. 


Liabilities are what a person owes. It includes utility bills, payments owed for certain assets such as cars, the balance of credit cards, and loans. 

Net Worth

Net worth is the difference between what a person owns and what a person owes. So this is a good measure of a person’s wealth. Net worth shows a figure of what a person owns after all the liabilities are settle. Negative net worth shows that you owe more than what you own. 

There are two main ways to increase your net worth. One is to increase your assets, and the other is to reduce the liabilities. A person can increase assets by increasing the cash flow or by enhancing the value of the assets. 

Preparing a personal balance sheet

The personal balance sheet is more or less the same as a business balance sheet. You can prepare a personal balance sheet using three easy steps. 

Firstly find out all your assets and jot them down on the column on the left. Those assets may include cash in the bank, investments, the resale value of your house, car, etc. Add the total amount of your assets at the bottom. 

Secondly, write down all your liabilities. Record all your liabilities in the right side column. Some of the examples of liabilities are personal loans, the balance of credit cards, etc. Add the total of your liabilities at the bottom. 

Finally, calculate the net worth. You can calculate the difference between your assets and liabilities to take the net worth. 

There are specific ways that you can increase your net worth. Some of them are growing your asset base, decreasing your liabilities, or doing both simultaneously. It is essential to update your balance sheet continually. 

Benefits of a personal balance sheet

Preparing a personal balance sheet is an essential exercise for all of us. A personal balance sheet provides multiple benefits. One of the key benefits is that it allows you to understand whether you are improving or losing financially. A balance sheet that shows a decrease is a sign of financial loss.

A personal balance sheet provides you with an accurate picture of your financial situation. Setting financial goals becomes much easier when you know your current financial status. A balance sheet is an ideal method to use if you want to increase your personal cash flow. 


Private Family Banking and Personal Finance 

Private family banking provides multiple benefits. It ensures that a person does not fall into a debt issue. Most families need to take on debts at some point in life. It can be to pay for college, cover medical bills, or build a house. Interest rates that come along with debts can harm a person’s accumulated wealth. So this is when private banking will come into play. 

Private family banking provides you with the opportunity to borrow funds from whole life insurance policies. This option allows you to obtain cash when required, without going for traditional lending methods. 

The benefit of the private family banking 

One of the key benefits of private family banking is the option of borrowing from yourself at zero interest. Instant cash can be obtained when a person requires it. The real advantage comes when you are paying interest to the insurance company on the amount you borrowed. At the same time, your policy will cancel out this interest by the real interest generated. 

The second advantage is tax-free wealth growth. 

The interest of your policy is not subject to tax, which is an added advantage. It will be a massive saving over time. 

Another benefit of private family banking is the lack of market risk. The growth assured by the policy can eliminate market risk.

Cash Flow Banking and Personal Finance 

Cash flow banking is a method that allows a person to obtain the opportunity cost of their dollars. It provides you with the opportunity to become your bank and earn interest. Cash flow banking is available in whole life insurance paying dividends. 

A disadvantage of term life insurance is the lack of living benefits of a whole life insurance policy. Whole life insurance is disadvantageous due to higher premiums than term life insurance. Your premiums will show how much you would prefer a cash flow bank with a wealth maximization account. A wealth maximization account will provide liquidity and a constant rate of return. It is also the key to cash flow banking. 

Some of these powerful and wealthy families have engaged in whole life insurance policies and cash flow banking. The list of well-renowned people includes Walt Disney, J.C Penney, Ray Croc, John F. Kennedy, etc. 

Benefits of cash flow banking 

One of the main benefits of cash flow banking is that it profits from the interest rate when you borrow against the whole life insurance policy. 

It will also give a person the flexibility and open avenues to build long-lasting wealth. You will obtain the opportunity to access your money and use it any time you want for any need of yours. It is not subjected to market fluctuations. 

How to increase your personal cash flow in brief

Personal financial statements are some of the critical tools used to monitor your cash inflows, outflows, and net worth. These are the ideal methods a person can use to improve their cash flow through personal finance: personal cash flow statement and balance sheet work hand in hand. Your net cash flow can be applied to your total net worth to increase your asset base without increasing liabilities. Private family banking offers a range of benefits. Some of them are protection, growth, taxes, and lack of market risk. Cash flow banking allows you to build lasting wealth by becoming your bank.

In conclusion, personal finance is the method to manage your budget. These personal finance techniques will help to face financial challenges better. Moreover, it will help a person to achieve financial success while becoming financially literate.

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