Creating a cash flow statement starts with identifying the cash received during the time period involved. For most people, the main source of income is money received from a job. Government payments, such as Social Security, public assistance, and unemployment benefits Amounts received form pension and retirement programs Alimony and child support payments Cash payments for living expenses and other items make up the second component of a cash flow statement. Fixed expenses are payments that do not vary from month to month. Rent or mortgage payments, installment loan payments, cable television fees, and a monthly commuting expenses are examples of constant or fixed cash outflows.
Variable expenses are flexible payments that change form month to month.
A deficit exists if more cash goes out than comes in during a given month. This amount must be made up by withdrawals from savings or by borrowing. When there is a cash surplus, this amount is available for saving, investing, or paying off debts. The Savings ratio, or the amount saved each month divided by gross income, is an indication of your ability to save for long-term goals. If not, you may want to cut back your credit card spending and start paying off your debt.