Now that your Net Worth Statement is in place, let’s move on to building your Cash Flow Statement — the next diagnostic in our financial check-up.
Remember the doctor’s office analogy from the last post? We’re still on the scale and checking our blood pressure. This isn’t about where we want to go — it’s about where we are. If you don’t know your current numbers, you can’t change them.
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Where to Find the Cash Flow Template
There are three tabs in the spreadsheet. The second tab is the Cash Flow Statement.
Step 1: Inflows
Start at the top by entering all household income for the past 12 months. Use gross income, not take-home pay.
Include:
- Salaries
- Interest and dividends
- Capital gains distributions
- Rental income (use net income, not gross rent)
- Any other sources, like distributions from a trust
For rental properties, think like a business owner. Enter the net amount that actually lands in your account after covering:
- Mortgage (P&I)
- Taxes
- Insurance
- Utilities
- Repairs and maintenance (both planned and unplanned)
If you’re unsure how to calculate this, your CPA can help. What you want is net cash flow, not just revenue.
Double-check that the formula for Total Inflows is working before moving on.
Step 2: Outflows
Outflows are broken into four sections:
Savings & Investments
This goes first because it’s your top financial priority. As Warren Buffett says, “Pay yourself first.”
You might see:
- 401(k) contributions
- IRA contributions
- Savings account deposits
- Brokerage account contributions
Even if you aren’t saving right now, list the accounts that apply (e.g., “Retirement Plan – John”, “Investment Account – Joint”) and enter $0 for now. The point is to get a clear picture, not to judge where you’re at.
Fixed Outflows
These are monthly bills you can’t easily adjust.
Examples:
- Mortgage or rent
- Insurance premiums
- Loan payments
- Cell phone bills
List them all, exactly as they are. We’ll revisit them later when we work on strategy.
Variable Outflows
This is where most people lose track of their money — and where the most potential lies.
Some categories are flexible (dining out, entertainment, subscriptions). Others are semi-fixed (groceries, gas, utilities). But this section is key to understanding how you spend your money energy — because yes, money is just energy you’ve stored from your labor.
Pro Tip:
Most of your variable spending likely runs through a debit or credit card.
Here’s how to figure it out:
- Download your last 12 months of transactions from your bank or credit card in .CSV or Excel format.
- Sort by merchant in Excel or Google Sheets.
- Use formulas to add up what you spent per vendor or category.
Amazon might need manual review, but most expenses (groceries, gas, eating out, etc.) will be easy to categorize. Add a new column, tag each line with a category, then sort and sum.
If you need help:
Ask ChatGPT: “How do I sort and sum rows in Excel to categorize my spending?”
4. Taxes
Taxes are mostly outside your control in the short term, but you still need to track them.
Use your pay stubs to find:
- Federal income tax
- State income tax
- FICA (Social Security and Medicare)
Multiply your per-paycheck withholdings by the number of pay periods in the year. If you exceed the Social Security wage cap, adjust accordingly.
Final Check: Is It All Adding Up?
Make sure:
- Each section (Savings, Fixed, Variable, Taxes) totals correctly
- Total Outflows = the sum of those four sections
- Net Cash Flow = Total Inflows – Total Outflows
Your Net Cash Flow might be positive, or it might be negative. Don’t panic either way. This is just data — and now you have a clear, accurate picture.
In the next post, we’ll talk about how to turn this picture into a plan.
Summary
This isn’t budgeting. This is mapping your money as it is. It’s a baseline. It’s real. It’s where change starts.
In the next post, we will build your spending plan. A spending plan helps you take control of your money and direct it to funding your long-term goals.
Take the time. Do the math. Know your numbers. You’ve got this.
