I always hear about how cash flow is king so I decided to dedicate this post to analyze whether cash flow is indeed “king”.

What is Cash Flow?

When defining the fiscal strength of an individual, the most important financial aspect to consider is the cash flow.  Cash flow is the movement of money within any given account, of course, a positive cash flow is king.  Factors consistently replenish and deplete funds within that account, these include expenses like rent, debt payments etc. and positive factors, like income, rental income, dividend income etc.  This movement of funds is typically observed for a set period of time and then this is used to determine whether one has positive cash flow or not.  This figure is then represented in a statement of cash flow and can be used to determine the specific factors of an account that are performing well and those that require improvement or adjusting.  It sort of works like a budget, but not really.

Types of Cash Flow

There are three primary types of cash flow that are analyzed for the cash flow statement.  Each will apply to both businesses and individuals in different ways.  The first is operational cash flow.  Operational cash flow, as the name implies, results from the money generated by typical operations.  This means the production of a good or service for a company or the income generated from a job or side hustlin’ projects for individuals.

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I got an email the other day from a reader (I kid you not, I didn’t edit this email to make myself feel good– though by the glowing email, it almost sounds like I did! ).  I really really heart fan mail- ’nuff said.

I would like to start off by thanking you! Your blog is one of the best things that has graced my inbox EVER! Before you, I was drowning in all of the financial lingo, with no clear place to start on my ‘investment journey’.  I finally have a starting point for myself with the confidence to know I have the ability to navigate the world of investing.
Anyway, the reason I’m writing is because I have a question about short term goals.  Everything I read says you should be in for the long haul, which I will be.  But in the mean-time, I have a goal  with my partner in about one year.  So, here’s the run down. We have a townhouse in construction, which is payed for in full, however we want to save for upgrades in the mean time.  We have a high interest TFSA with ING, but I can’t help but feel that I should be doing more with my money.  Do you have any advice about short term goals? Are dividend paying stocks an option?  I am very new to this, so any advice you have to offer is really appreciated!

So this email begs the question.  What do you do for short term goals?  First we must decipher what short term goals are.

What are Short Term Goals?

To me, short term goals are any goals you want to save up for that are in the one to three year time horizon.  Our dreams are free, but to make them come true, 99.9% of the time, you’ll need some money to make that happen.  Some of my short term goals is to save enough money for school, save enough money for my upcoming Thailand trip early next year, and also fund my journey to climb the highest peak in Africa, Mt Kilimanjaro in two years time.  As you can see, I am addicted to travel and my goals are purely associated with travel most of the time.  I’m sure yours are different.  Everyone is an individual and we all have different dreams and goals.

Here are some other examples of short term goals:

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Part of blogging about your goals and resolutions means trying (key word, trying!) to keep accountable with them.

So in order to keep accountable, I thought I would share with you how I’m doing so far with my personal finance resolutions for the year 2011 so far.  As you know, I blogged about my personal finance goals for this year early in January, and also shared my personal goals.  I will share how I’m doing for both.

• Max out TFSA to $15000- In January, I’ll have $15,000 of TFSA space because I took out all of my TFSA’s for my down payment.  I plan to sell some of my non-registered stocks in order to put money back into my Tax Free Trading Account and top it up with savings.

40% to goal completion: I’m at about $6400 in my TFSA, so I have about $8600 more to go to max out my TFSA.  Initially I was thinking of selling my non-registered stocks because I hate keeping track of capital gains when I buy and sell, but I don’t want to interrupt my beautiful dividend paying stocks by selling them and having to pay capital gains.  I’ve been slowly selling my non-registered portfolio and moving it into my TFSA.  I also put in an $1000 from the tax return I got this year.

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This guest post comes to us from Jack at Darngoodblogging.com. He usually talks about debt and credit cards on his blog. Thanks Jack for writing this guest post. I don’t know much about US retirement accounts and this has helped shed some light on it for me.

Your future essentially depends on how you handle your present. The more prudent decisions you make now, the better your chances for creating a secure future for yourself and your loved ones. Retirement plans form a very crucial part of your future planning. You definitely wouldn’t want to step into your retirement with scanty funds and looking for cheap debt consolidation or debt settlement services to resolve your debt issues. So, it is absolutely important that you get geared to prepare a proper retirement plan to secure your financial future.

Surviving on your retirement income

Surviving on your retirement income is a matter of real concern. Social Security, company pension plans, and the individual retirement investments are the three main sources available for retirement income.

Under the Social Security Administration, Social Security offers about 40% of the fund you require for a pleasant retirement. And pension plans are becoming rare day by day. Most of the companies that offer pension plans require the plan holder to be an employee with the company for a specific span of time. But unlike earlier, they are no more considered a source of substantial retirement income.

The uncertainty associated with the above sources highlights the need for a proper retirement plan that contains the right mix of investment and savings.

Save substantially for your retirement

Substantial savings is the key to a comfortable post-retirement life. Always remember, if at all you work after your retirement, it should be your choice and not a necessity. Often a lot of retired people are forced to work hard at an old age, simply because their savings are not enough to last them throughout their remaining life. The inflation, soaring costs of commodities, tax obligations, rising medical expenses add to their plight and make their living all the more difficult.

Such costs are expected to rise even more in near future, making the baby boomers’ post- retirement lives all the more expensive. So, to begin with, create a new savings account where you can deposit a certain amount every month as a
part of your retirement plan. Save as much as you can.

Consider long term investment plans

Smart investments are very crucial for a fruitful retirement plan. You can consider reliable retirement plans such as IRS Roth conversion and 401K plan to spice up your retirement planning.

It is very important to understand how your plan works and what benefits you will receive. Keep a track of your retirement accounts so that you can retire peacefully. There are different types of retirement accounts you can choose from and it is best to talk to a financial advisor about which account might be right for you and your situation.

Amongst a number of retirement accounts to choose from, 401(k), 403B and IRA are the most common type that people make use of today. Using Roth IRA can also be very advantageous because it offers great tax advantages. If you are confused with the host of options out there, seek the advice of a certified accountant to help you choose the account that is right for your situation. Remember, retirement is not the end of life; with proper planning, you can rediscover the joy of living!

EDITORS NOTE: I agree that we shouldn’t be relying on the government or pension plans for our retirement.  I must admit that it’s hard to think about retirement being so young, but I know it’s necessary.  It’s just that other priorities come into play (like kids, a house, saving up for a wedding etc.)   I definitely do want to work after retirement (when I retire early, of course) but maybe just once or twice a week and just for fun.  Studies have shown that working after retirement can help prolong life (the brain doesn’t get stagnant because you’re constantly working it out).

Readers, what do you think?  Do you think about retirement a lot? Would you want to work after retirement?

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If you haven’t been living under a rock, you might have heard of Mint.  Mint is this start up company founded in no other than San Francisco (where all the beautiful people and geniuses live) in 2007 and had been bought for $170 million by the huge conglomerate Intuit earlier this year.

Mint.com is a free budgeting tool that was initially untouchable by us Canadians because they didn’t have the Canadian banks in list of banking institutions you could add.  This has changed, and I have both the Mint.com log in (you can check your stuff easily online) and the mobile iPhone app (can quickly check transactions, budget etc.)

I’ve been using this Mint.com app and checking online (and receiving their many updates to my email) for about a month or two.  Being the opinionated person that I am, I would like to give my two cents on Mint.com based on my own experience with it.

Before Mint.com, I was using an app called PageOnce that I mentioned in my post on the 6 best free apps that will make your personal finance life better.  I liked Page Once but I was looking for something more comprehensive, something I could manage my budget with.

This is what the budgeting tool looks like (I found this on photobucket )

Pros of Mint.com:

• I like it’s ease of use.  Very. Easy. to Use. (If I can do it, you can!)
• The website design is very pleasing to the eye.  Nice solid colours, soothing lines.. not too busy looking
• It’s free and the app for your Smartphone is free too
• I love how you can show all your saving accounts, chequing accounts, credit card balances, and investments all in one place (more about investments later- in the cons list)
• There is a savings goal tool which encourages you to put your money in a separate account so you won’t be tempted to dip into your savings; this savings goal tool tells you if you are ahead or behind schedule of your goal.  This is probably one of my favourite features of the savings tool.  You can even select a picture to reflect your goal!
• I really like their budgeting tool too- you can keep track of your expenses (and it will be put in automatically based on your labels), because they label everything for you (e.g. if you spent $50 on your cell phone bill, Mint.com automatically categorizes it in the phone bill category, so you can keep track to see if you over spent or not this month.
• They notify you by email about big changes e.g. big purchases, so if something is fishy in any of your accounts- including credit card- you’ll know right away

Cons of Mint.com

• Possible security breach- you have ALL OF YOUR FINANCIAL INFORMATION PASSWORDS in ONE ACCOUNT.  Can be kind of scary.  Mint.com maintains that their website is super secure and safe to use.  But the security measures they take to protect your information seems kind of ambiguous and vague.
• They notify you if you are being charged a bank fee (but my bank fees are immediately credited back to my account), but Mint doesn’t know this and still sends you a notification
• Their notifications can get a bit overwhelming and annoying, but thankfully you can change your notification setting
• Because it’s free, they get paid from advertisers by asking you to sign up for this FREE banking account, or BETTER investment services than what you have now.  I think as long as you stay away from signing up, it’s a useful tool.
• One major drawback is that they don’t have every financial institution listed- for some reason, they don’t have QUESTRADE (which is my favourite investment tool and where all my non-registered stocks are at), so I can’t keep track of how much money I have in those accounts.. which tends to negate the point of showing your net worth on one page.
• Another drawback is that you can input the asset of house/home and car yourself.  You could make up an imaginary number to make yourself feel better and your net worth will appear very inflated with Mint.
• One major issue is that they don’t recognize a “joint account”.  For example, in my joint account with my boyfriend, the mortgage comes out, but we both pay for half.  Mint recognizes it as a full amount and tells me that I am overpaying for my mortgage (which may be a good thing, but it isn’t the case for me).  So with Mint, you might be best to amalgamate everything with your partner if you want an accurate depiction of your money (which I don’t plan to do).
• Another draw back is sometimes they mislabel things, and then it won’t reflect in your budgeting tool, but this can be easily fixed by relabeling it correctly to reflect  your budget labels.

So with all the pros and cons, it’s kind of a mixed bag.  I like the budgeting and goal tools, and I like how everything is updated very quickly.  The cons are easily worked around though, and I personally like using it.  It’s easier to keep track of things, though I wish they would have every financial institution (e.g. Questrade) on their pick list.

A tip if you are planning on signing up for Mint is to make sure you have the CANADIAN institutions, otherwise you’ll be like me and flabbergasted for one week wondering why your password for your credit card or savings account doesn’t work on Mint. So, for example, ING Direct is not just ING Direct, it should be ING Direct CANADA.

Canadian Finance Blog and Money Smarts Blog also give their two cents on Mint.com too, so be sure to check out what they have to say.

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