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So, the second part of the statement is to see where the cash goes out. First of all, it's hard to keep track of all your cash outflows.
In this lesson, we'll talk about calculating a cash flow statement.
The purpose of a cash flow statement is to track the net change in your cash over time.
You might get paid twice a month, and that's okay because your cash flow statement will report monthly income, which will simply be your two paychecks from that month added together.
At the end of the month, your net number will be the same.
So, one of the first things you need to do is decide what time frame you want to track.
Companies, and most people, typically settle on monthly.
You might give to the disenfranchised gentleman on the street playing guitar. All of this is cash going out, but when you sit down at the end of the day to track it, remembering all of those quick decisions can be difficult.
The second reason it's difficult to track cash going out is that there are so many ways to spend money now, it might be tough to realize when you spend cash.
If it is, you could put it in your savings account to save for Cancun or some other kind of fun!
If it's not, you might need to borrow from your savings.