Cash flow should increase every year

By Bala | Bala | 30 Nov 2023

Our financial growth is usually dependent on the cash flow we have. For us to say that we are growing very well financially, we have to keep our cash flow increasing every year. There are a few considerations even if the cash flow is increasing. That's what we are going to be seeing in this article. If our salary was 1000 $ last year and this year if it is 1200$, that alone is not a good increase. We have to understand if that is a good increase globally considering the value of our regular needs.

Cash flow from multiple sources is always important. We cannot just have one single source of income. That's a big failure if that income source stops someday. We should be able to survive even if one source stops. That's why it is better to always create multiple sources of income streams. That's very important for a steady cash flow. Sometimes the cash flow may not be the same all the time. It might be initially a value and when we introduce multiple income streams, the value can go up and down and it can keep happening. That should be okay as long as the cash flow is more than what is needed for us.


Consider inflation

Inflation is a very big consideration. We have to see if the cash flow is sufficient for us even if the inflation is increasing every year. Nearly 50 years back 100$ would have been a very big amount. Today 100$ is not as big as it used to be back then. Maybe we can say that 1000$ is now equivalent to the 100$ back then. Considering this calculation, we have to understand that if our salary was 100$ 50 years ago, it should at least be 1000$ based on the inflation rate. We shouldn't be earning a little over 100$ even today. 50 years is a huge gap in understanding this concept but in reality, we can see the effect of inflation even in 5 years.

More money to chase our dreams

Cash flow should be in such a way that we should be able to cover both our basic financial needs and apart from that it should help us chase our dreams. More new dreams are created when we start earning more money. That's more like temptation than actual dreams. There is no harm in that too. Dreams are usually constant and we might have had that from childhood and would have thought that we should achieve it someday when we have enough money to achieve them. Those are proper dreams that can be fueled when we have enough money.

Now the cash flow should be in such a way that we should be able to keep saving up for our interests and dreams too. Just satisfying our daily needs or monthly needs will not be sufficient for us. Having multiple cash flow streams might be able to help us with this.


Increase should be more than inflation value

Usually salaried employees get a raise in payment every year or whenever they do something extraordinary. Not everyone gets a special hike in the salary but when it happens every year, we have to be sure that the increased value is better than the inflation value. Let's say if the inflation value for a particular year is 6 percentage, if we get a salary hike of 5%, it is not going to make sense because we are losing 1 percent globally. But if the salary hike value is 10% then it means that we are doing good or at least better than the inflation value so that we can keep growing financially.

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