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Business Owner's Guide to Financial Freedom


What is cash flow? It is the amount of money you have after paying all your bills and purchases.

If you spend more than you make, there are symptoms: you have no cash, a high level of financial stress, and lots of debt. You are in a negative cash flow position, more money is going out than coming in.

If you spend less than you make there are benefits as well. You have savings, you are reducing debt, you have a positive financial outlook. This is a positive cash flow state – more money is coming in than going out.

Ideal cash flow is having enough non-retirement savings so you can live from your investment portfolio within a reasonable time. For the purposes of this article, ideal minimum cash flow is at least 10 percent of funds that are free to use, save or pay-off debt after paying all expenses and all purchases. For the purposes of this article, savings does not include savings into your retirement accounts, since they do not impact your daily cash flow and have limited access without adverse tax consequences.

Without good cash flow, the chances of accumulating enough money to live off of are slim to none. That is why you must put so much emphasis on this topic. Improving your cash flow should be your number one priority. It truly is that important to ensuring your financial freedom.

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