financial independence

It is highly important
that you track your monthly expenses, irrespective of your financial
situation. Track your expenses on paper
or use an Excel spreadsheet. It is
easier to use Excel because you can find dedicated expense tracker templates
for free online. Hence, you can just
plug in your data and the template calculates your information without having
to know excel formulas.

The critical reason to
track your monthly expenses is because it is an important component of
budgeting. You can’t budget and
establish where and what to cut back on until you know what your expenses are. After tracking your expenses for a month or
two, you will have a good idea of where the best opportunities are to curtail
your spending.

Ascertain your cash flow

Cash flow is simply cash
outflows minus your cash inflows. You can determine your cash inflows by
including your net income and income left
after all deductions and taxes. Calculate cash outflows by totaling regular monthly expenses such as,
mortgage or rent payment, food, fuel and transportation, utilities, loan or
credit card payments, child care, and other regular expenses.

You can determine your
true net cash flow by deducting outflows from inflows.  A positive net cash flow number denotes that
there are funds available for paying debt off faster, savings and/or
investments.