Thursday 22 October 2015

Cashflow simply mean the inflow and outflow of cash. ROOT Cause and Solution.

By definition, Cashflow simply mean the inflow and outflow of cash.
Put into personal level concept, it means the inflow (i.e. salary) and outflow (i.e. expenses) of cash.

You see, many people only have one main inflow of cash which is their active income (work) whereas their outflow of cash is infinite. It can be branch out to credit card bill, holiday expenses, parent allowance, medicine bill, insurance and more!

And this is what i call the "ROOT Cause" of problem.

And the solution for me, very simple, I choose/determine the outflow of the cash. 
you see, outflow of cash can be alot of things like i mention above and one of the option for outflow of cash can be "INVEST". This is also the key our solution.

WORK -> Money comes in as pay = inflow of cash.

OUTFLOW of cash -> pay off what is necessary for you to survive (i.e. Foods, Electric/HP bills, Parent Allowance, Transport etc), whatever remain should all (if not most) go into invest.

When you invest, you are actually buying income generating assets, in short generateextra stream of inflow cash.
Now you have one extra stream of (Passive) income (initially was only from work).

The Key here is to generate enough passive income to cover your expense (outflow of cash)
and when this happen, basically you had achieve FINANCIAL FREEDOM !!!


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