In the strictest sense, negative cash flow can only be removed from your budget by increasing your income or reducing your expenses. Most commonly though, when a negative cash flow shows up in Quicken or Microsoft Money, it’s due to an error in one of your estimates. While overestimating your expenses is better then underestimating them, it can leave you with a projected negative cash flow even if your finances really would balance. Using the most accurate estimates possible and updating your budget as actual expenses become known is the best way to remedy this problem. Also look for obvious errors such as entering a budget item as a weekly expense rather than monthly or things of that nature. The downside of an apparent negative cash flow, if your budget actually should show a positive one is two-fold: First, you don’t have an accurate picture of your financial situation. Second, in order to balance your budget, you might cut back in some areas that you’d prefer not to. Making cuts that aren’t necessary, but only appear necessary because of an apparent negative cash flow, are the most painful.
If you enjoyed this post, subscribe to my feed via RSS or email.
You can support Richer by the Day by visiting our advertisers and sponsors. A thumbs up from any StumbleUpon users would also be greatly appreciated.
Related Posts
Budgeting 101Why You Need a Budget
Envelope Budgeting Method Overview
Wealth Accelerators
Why Cash is Still Relevant to Your Financial Plan
