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September 24, 2013


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This article has some great advice but I would always use a budget.

I disagree somewhat with the definition of cash flow. That is a very broad definition but it is not necessarily true. You can have "income" that does not produce current cash flow. You can also have cash inflow or outflow that is not income or expense.

I do agree with sharon that there is some great advice in the article and that I would always use a budget. I have been using one pretty much since the day I started working (it might have been pretty crude back then) and still use one today, 33 years later.

FMF is just trying to keep it simple.

Budgets are a great tool. But you can be in tune with your cash flow even if you do not use one. FMF says he uses Quicken. I use a simple spreadsheet when I pay my bills and aggregate my accounts and financial info in two places- (i)on a free website called "personal capital" (anyone can use this one) and (ii) on Fidelity Investments website with a tool called "Full View" (you need to have a fidelity account for this one).

Both of these sites show me all my accounts in one place, automatically determine my net worth, show me my income and expenses in detail and much more.

Like most things in life-- there is often more than one road to the finish line. Budgets are a great tool and can be very useful- especially at the start, as FMF states. But as you become more attuned to your finances--you may be able to get similar information in other ways.


We're big trackers, and since we've started a blog, we post our monthly balance sheet and income statement (basically what FMF is calling cash flow) every month. It's a great review of where we spent and what we want to refocus on for the next month. And best of all, since we've set it all up it takes just a few minutes to pull the data from mint every month.

I agree with Mike. Cash flow is only for income/expenses dealing with cash and the main components are operating/investing/financing (again only when cash is used). What you described (income minus expenses) is an income statement. I do agree that budgetting has a place, but true budgeting comes from tracking revenues & expenses and recognizing a predictable pattern that can be analyzed

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