The Basics of Cash Flow

NOTE:  I don’t exactly know who made this awesome piece.  I got this from an email eons ago that I wanted to share.  I hope you learn something from reading this because I did. (Some portion edited/deleted/translated to English.)


Cash flow concept.

There are those who e-mailed me asking about the basics of cash flow. I’m really sorry that I assumed everybody already understand it. Anyway, by demand, here it goes…

The basic is. What pattern do you see if you will get a Php100.00 bill and monitor where and how it is transferred from one possessor to the other? How does it flow? The pattern for a typical Pinoy is –

You earn from your work, you spend it on food, gadgets, clothing and other basic needs. Before you reach the next payday, paubos na yung pera mo. But that’s okay, payday is just a few days ahead and it doesn’t matter if you run out of money, you are expecting money again any time soon.

This cycle goes on and on and you make some sidelines or create other ways to earn but it seems that money was never enough. (I am tempted to explain further but let’s all stick to basics).

So you can’t leave the job that you have because a week without work would affect the cash flow you have to support your family and needs. As much as you wanted to accept another job, the gap would make you pay less for a couple of days, which makes you a slave to your boss.

At least, you have a job to support your needs.

So to illustrate…Cash is flowing inside your pocket.

Years have gone by doing your monotonous routine.

Question… what if you get fired? Or you were forced to retire because there are new and younger people ready to take your place. What would you do?

As an OFW, Makati executive, top salesman, engineer, attorney, teacher, etc… What if it all ends? The sweet cash that enters your pocket every 15th and 30th suddenly comes to a halt.

There are two things you can buy with your money, an asset and a liability.

To describe each, an asset brings money inside your pocket; a liability takes money out of your pocket. Another way to see it is that an asset if you buy one, will bring the money you spent for it back to you in two or three folds. A liability, when you buy it will not give your money back at all.

In other words, if it’s an asset, you’ll have a return for your investment; but with liability, you can say goodbye to your money.

The problem with some people is that when they’re still working, they would keep buying liability!

I have seen OFWs get back to the country with gold chains, and if possible to wear five sunglasses all at once, they will…Dvd, component, jackets, clothes, drinking and partying…

And of course, employees that changes cellphones on a weekly basis, mags on wheels, and closet full of clothes, then complain they don’t have anything to wear.

Guys, please think. What you bought, will it bring money back to you? I know what you have in mind… you have to enjoy what you worked hard for. That’s right, but think of something that will last… think of your future.

I have seen the worst of people who were lawyers of stature, executive secretaries of top rank business men, people who worked for big companies, earned a fortune and got a big retirement pay by the millions. Their fortunes, gone.

Why? Because their cash flow went in, and went out.

I need not mention basketball players, actors, singers, etc… Check their career path. After acting, singing and playing, they venture into POLITICS since they bought liability with the millions they earned.

Going back… all the liability they bought, they sell it cheaply! I’m wearing a gold chain now, which I got from a seaman… he bought it for Php35,000 and sold it for Php8,000 to me. Jewelry is not an asset!  Why? It’s true that it’s value does increase but if you go hungry, you sell it for a lower price! Cell phones, dvd players etc. even house and car…that’s the cash flow of most OFWs.

The question is … “WHAT IF THE INCOME STOPS?

You have to establish something today that will take care of your future.

Wait, wait.  What can you do so those scenarios won’t happen?

You must create a source of income that will continually make money flow inside your pocket. Start a business! While you are working as an executive or an OFW, or a professional… START A BUSINESS and MASTER that business till you get out of that company. Come retirement, you will have something to support you when you get old!

Imagine yourself when you reach an older age…you have money that the company gave you as your retirement pay… what will you do?

You can consume the money till your old…what if it won’t compensate?  And you lived long enough that you depleted your retirement money.  You only have a budget until 65 years old.

The answer is, stop buying liabilities and instead buy assets now. I don’t care if it is a banana-Q store, ice candy or a sari-sari store, etc… start now! Because, your experience here will teach you what to do in the future. It’s so hard to struggle in business when you are 60 years old.

You have to create a source of income separate from  your compensation. That when the time comes that you have to stop working, you will have your own source of money! Create assets, start a business that will be there to support you and your family.

It’s not to quit your job, what I’m emphasizing is to start a business while you’re working and stop spending your money on liabilities and start putting them into assets!

Again, assets versus liability.

Wait a minute, is it so bad to buy good things then?  Nope!  Just make sure that you buy it with the excess money you have.Business has to be prioritized! Even if you’re not employed, you have your business you can grow and expand.

If before you can live with only a pair of shoes, then don’t change it.

Create assets and lessen liabilities. Invest and learn now…

You can start with minimal capital.  Don’t use your extra money to buy a gadget, new shoes, or any other material things that doesn’t have value.

I wish all of us become financially-problem free.  And this Basic Cash flow article helps.


To sum this article up – don’t upgrade your lifestyle just because your income did, start investing while you can, and live a simple life and within your means.


Time, A Mystery of Faith

The book was written by Voltaire, and his character named Zadig, got it in one scope.


Excerpt from Zadig, Book of Faith (Voltaire)

“What, of all things in the world,
is the longest and the shortest,
the swiftest and the slowest,
the most divisible and the most extended,
the most neglected and the most regretted,
without which nothing can be done,
which devours all that is little and enlivens all that is great?”

Answer: TIME.

Nothing is longer, since it is the measure of eternity.
Nothing is shorter, since it is insufficient for the accomplishment of our projects.
Nothing is more slow to him that expects; nothing more rapid to him that enjoys.
In greatness, it extends to infinity; in smallness, it is infinitely divisible.
All men neglect it; all regret the loss of it; nothing can be done without it.
It consigns to oblivion whatever is unworthy of being transmitted to posterity,
and it immortalizes such actions as are truly great.


Revolutionary Road by Richard Yates


“If you don’t try at anything, you can’t fail…it takes back bone to lead the life you want.”

“Being alone has nothing to do with how many people are around.”

“You want to play house, you got to have a job. You want to play very nice house, very sweet house, then you got to have a job you don’t like. Great. This is the way ninety-eight-point-nine per cent of the people work things out, so believe me, buddy, you’ve got nothing to apologize for.”

“People did change, and a change could be a bloom as well as a withering…”

“Intelligent, thinking people could take things like this in their stride, just as they took the larger absurdities of deadly dull jobs in the city and deadly dull homes in the suburbs. Economic circumstances might force you to live in this environment, but the important thing was to keep from being contaminated. The important thing, always, was to remember who you were.”