From the course: Financial Wellness: Managing Personal Cash Flow
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Analyze your cash flow status
From the course: Financial Wellness: Managing Personal Cash Flow
Analyze your cash flow status
- Now that you've gathered all of the information about your income and expenses, our next step is to determine your cash flow position and priorities. We can organize cash flow priorities using the 3S Model. 3S stands for safety, stability, security. Priority number one, safety. cash flow safety means you can meet basic food, shelter, and health needs for yourself and any dependents on time, without incurring debt. Priority number two, stability. Cash flow stability means you're able to meet your basic safety needs, and can start to prepare a financial cushion for needs and goals that are not immediate. This cushion, or contingency fund, is there to cover periodic expenses, dips in income, or any financial surprises. The size of people's contingency funds vary. Most experts recommend having at least three months of expenses reserved, but a good rule of thumb is the more your income and expenses swing, the more…
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