Green board with the words tax, income, profit and cash flow written around a pie chart - Determine your cash flow

How To Quickly And Easily Determine Your Cash Flow

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How to determine your cash flow means the difference between knowing whether or not you are able to actually stop working.

In the Financially Free Retired Early (FIRE) community the idea is to grow your asset income to be able to cover all of your expenses.

Imagine that the money your investments / passive-ish business and other ways you make money that isn’t connected to clocking into a company 8 am – 6 pm (and I can spend an hour in traffic each way, awesome – I didn’t like to have personal time anyway).

You see the FIRE community is sort of done with working. And that is fine and all but you need a plan to make sure that in 3 years you aren’t looking for a JOB. Would love to hear the explanation for the gap in the resume. “I am bad at math.”

Knowing your cash flow is good even if you aren’t in the retire early community. I would imagine that you would want to retire eventually someday and knowing your cash flow and net worth is how you do this.

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These ideas are based on my personal experience and opinion and should not be considered professional financial investment advice. Furthermore, the ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Green board with the words tax, income, profit and cash flow written around a pie chart - Determine your cash flow

Defining cash flow and why it’s important

Robert Kiyosaki invented a game called Cashflow, which is a board game that teaches you how to get out of the rat race of never-ending work. Primarily through real estate investing as that is how he did it. I highly recommend it.

The concept of cash flow is pretty simple. It is like a budget except that it shows you where your money is coming from. Knowing where your money is coming from is very important.

The Difference Between the Rich and the Poor

Did you know that the average millionaire has 7 sources of income?

Most poor and middle-class people have one or two sources of income only. So when events like global pandemics shut down your company then you lose the only source of real income you have and have to switch over to government provided (or scraping by on the kindness of others).

So by plotting out your cash flow in real life you can see what you need to do to get your assets making enough money to offset your expenses.

If you can do that you will be financially free.

Snowy mountains with four small one room cabins and one large ski lodge with a backdrop of large mountains and evergreen forests.

What is an Income Statement


List out the sources of income you have and how often you are paid.

I am paid on the 15th and last business day and my wife is paid every two weeks. I would fill this out monthly so that I can capture the two extra paychecks my wife gets.

Then I would list any other income I have coming in. Do I have a different job or any sort of income that comes in? Dividends / capital gains / retail profits / etc.

Now total them up and that is the income you have for the month.

Congratulations that is the fun part of a quick and dirty budget. But this isn’t just a budget it is your tracking tool for financial freedom.

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Click here to learn how to save $3000 in 3 months.


Now list out the following items and the amounts.

  • Taxes – if you only have paycheck income use the amount you get into your bank account and you can skip this.
  • Home Mortgage Payment / Rent
  • School Loan Payment (s)
  • Car Loan Payment(s)
  • Credit Card Payment (s)
  • Food
  • Utilities
  • Trash
  • Water
  • Sewer
  • Gas
  • Insurance (Car)
  • Insurance (Life)
  • Insurance (Home) – if not wrapped into a mortgage
  • Eating Out
  • Child care
  • Pets
  • Cellphone
  • Internet
  • Health Insurance – Unless this is already taken out of your paychecks
  • Entertainment
  • Subscriptions
  • Memberships
  • Hospital Bills
  • Other expenses
  • Note any expenses that only occur once every other month (like my water bill) or every quarter or yearly like some insurance. Take the total and divide that by the number of months. 12 for yearly bills, 4 for quarterly, and 2 for those every other month. Add them in by their monthly number but put an * near them. You will want to save that amount in addition to normal savings.

Now total these up and these are your monthly expenses.

Pay Yourself First

In this section, you will list out the amount you put into the following accounts on a monthly basis.

  • Emergency Fund – If not fully funded
  • Savings
  • Retirement accounts
  • Other – I overfund several whole-life accounts for tax-free retirement money. Things like this would go into this category.

What is a Balance Sheet

This is the part of budgets that is missed but is the most important part. This is the part where you find out if you are living in a poor, middle class, or rich lifestyle. There is no judgment in that. We all start somewhere. Remember it doesn’t matter where you start but where you finish.


An asset is anything that brings you income. Or as Robert Kiyosaki said in his book Rich Dad Poor Dad, “An asset is anything that puts money into your pocket every month.”

Now we can list these out and don’t feel bad if there isn’t a lot of money in this column. This is where you start, not where you end.

  • Interest
  • Dividends
  • Profits
  • Rentals
  • Capital Gains
  • Royalties

If you are unsure what each of these mean, please read my article in the green box below that will clear all of this up as each deserves a lot of words and explanations.

Chess pieces King and Queen standing on coins on a dark background - From Active to Passive Income Different Types of Income

How The Rich Make Their Money

Have you ever wondered how the rich make their money?

Well they start by working a traditional job (well 80%+ do) and then they build assets over time until they are wealthy.

There are different types of assets that literally anyone can get into. Some are very active. Some are 100% passive. Most are what I call passive-ish. Lots of work at the beginning and then almost none later.

Click here to read From passive to active income.

Now total up the monthly amount of income you are getting from these sources. It shows the amount that you are getting from sources other than your job.

Now, most of you will have very little in this column. That is ok. The idea is to start to make decisions to build this column up until it has more than your expenses. Once you do that you can retire or do whatever you want in life.

You may want to list the totals for your savings / retirement accounts / business / etc. as well so you can figure out your net worth. If you don’t know what net worth is please read my article in the green box below.


I won’t lie. This is probably the hardest column to fill out personally. It will uncover how much debt you really have but that is needed in order to get to the truth of your financial position.

Now find the total of each of these. This isn’t a monthly amount – those became expenses above. Instead, you are looking to see how much debt you are really in. So write the totals below for each of the following:

  • Primary Home Mortgage Amount
  • Other Mortgage Amounts
  • School Loan Total
  • Credit Card(s) Total
  • Hospital Debt
  • Personal Loans
  • Other Debts

Now total this all up and this is the total amount that you need to pay off eventually. As you pay off each of these bills you will remove those expenses from your monthly expense column.

How To Use This To Obtain Financial Freedom

Now look at the amount of monthly income you are getting from your assets and subtract your monthly expenses from that number. It will probably be a huge negative number. That is ok.

The goal now is to pay off debts using the debt snowball method. As you pay off those liabilities fully your expenses will go down.

At the same time, you will want to work at increasing the amounts in your assets column.

With work, you will be able to decrease the amount in expenses and increase the amount in your assets. Once the money from your money assets exceeds your expenses you can choose to stop working in your job. Or stay and add more to your assets column as 100% of your paycheck can be dedicated to just building more assets.

Text on a green cover "5 Things to do to live comfortably and stop living paycheck to paycheck" free PDF

Are you living your best life or are you stressed about paying the bills?

In this quick 2-page PDF, I cover 5 ways you can get your financial life back on track.

I used to live paycheck to paycheck and after years of paying off debt and maximizing my investments I am now able to save and invest more than 45% of my wife and I’s gross pay.

This allows me to live comfortably (not a crazy rich person) and sleep better at night. If you want this let me know where I can send it to you below.

Wow, you read a lot to get here. Can you do me a favor, please? Can you leave a comment if this was helpful to you or if I missed something? Alternatively, it would help me out a lot if you shared this content with those that might need to see it. Thanks, you are the best!

You Now Can Determine Your Cash Flow


If you followed the instructions above you now know how much money a month you need. You also can figure out how much less you would need if all your bills were paid.

In addition to this, you can take the total of all your assets and subtract the total of your liabilities to get your net worth.

Now do the hard thing and start to pay off your debts and build assets. Read more of my blog to learn how to do both of these things.

You can start with my article on How to achieve financial freedom.

Picture of Dwight Scull sitting in his gaming chair in his office surrounded by board games and Role Playing Books.
“Marriage is hard. Divorce is hard.
Choose your hard.
Obesity is hard. Being fit is hard.
Choose your hard.
Being in debt is hard.
Being financially disciplined is hard.
Choose your hard.
Communication is hard. Not communicating is hard.
Choose your hard.
Life will never be easy. It will always be hard.
But we can choose our hard. Pick wisely.”

About Dwight Scull

I have been married to my wonderful wife, Rebecca, who puts up with me since 1999. I am a proud father to my Gen Z, son, and daughter-in-law. Grandfather to my favorite granddaughter who was born in 2021.

I lost my mom, father-in-law, and 12 others in 2013 and was DEEPLY in debt. I started reading and watching all the financial info I could find.

I chipped away at my debt and went from a negative $105k net worth having one home paid off, no credit card debt, and saving/investing 45%+ of my gross salary.

I used these daily habits to lose 100 pounds and keep it off.

I believe that you can overcome any challenge you face if you just take small daily actions and be consistent with them. It is how you will be financially successful.

Join my free Facebook group to get a ton of free resources to help you get out of debt, learn how to invest your money and work toward having the option of retiring early.

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