Money tip: Want to calculate your cash flow or liquidity situation? Here is a simple calculator

Cash flow calculator: What is cash flow or liquidity and have you ever wondered if you have enough liquidity (cash) to achieve your financial goals? How to calculate if you are a cash surplus or cash deficit by the end of the month? On Zee Business, our Money Guru expert Kalpesh Ashar tells you the finer points of this.

Ashar said that it was easy to calculate your liquidity position and plan your financial goals accordingly.  Your liquidity situation can be calculated by determining your total income which is comprised of your core income source and income from other sources against your total expenses.

Your income can come from the interests that you earn through your savings, investments in stocks and mutual funds, rent from your property and likewise while your expenses could be your grocery bills, utility bills, EMIs, house rents, and other expenses.
   
Calculating cash flow (3 member family)

Income                                    80,000
Other Income                        +20,000
=================================================
Total Income                          1,00,000

Monthly expenses                   per month in Rs/                    
 
Household expenses like grocery laundry          -10,000
Utility bills (Phone,Electricity)                              -10,000
School Fees                                                        -5,000
Conveyance                                                        -10,000                
Lifestyle                                                               -10,000  
Insurance premium/investments                         - 5000      
EMI                                                                      -20,000  
=====================================================
Total Expenses                    =                            Rs 70,000

======================================================

Total Income minus total expenses = surplus  
                                                                             1,00,000(-)70,000
======================================================
Surplus                                  =                               Rs 30,000

With this calculation at the end of every month your cash flow calculation shows that you have a cash surplus or liquidity of Rs 30000.

DEFICIT TABLE-
Monthly cash flow
(3 Member Family)

Income                                                            80,000
Other Income                                                +20,000
==========================================
Total Income                                                 1,00,000

monthly expenses                   per month in Rs/                    
 
Household expenses like grocery laundry     -20,000
Utility bills (Phone,Electricity)                         -20,000
School Fees                                                   -5,000
Conveyance                                                   -20,000                
Lifestyle                                                          -20,000  
Insurance premium/investments                    - 5000      
EMI                                                                 -20,000  
====================================================
Total Expenses             =                            Rs 110,000

Total Income minus total expenses = surplus
                                                                 1,00,000(-)1,10,000
========================================================
Deficit                            =                               Rs 10,000

With this calculation at the end of every month, you have a cash deficit or liquidity of Rs 10000.

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The liquidity gap is not an ideal situation for any household and it can disturb your long-term financial planning goals.

It is always important for you to know which side of the liquidity situation you are in.