Whether you're a business owner or an employed individual, one of the basic things you need to understand in managing your finances is your cash flow. Your cash flow determines the movement of money into and out of your daily life, and says a lot about your saving and spending habits. If you know how to manage your cash flow, you can watch your business grow. If you're employed, you can watch your saving do the same.

You have a positive cash flow if the amount of money coming in is more than the amount of money spent. Because of credit cards, most people think they have positive cash flow when they really don't. Most Americans live beyond their income, but never realize it because their credit cards give them a false impression of wealth.

If you follow a simple cash flow plan, you won't fall into the above category. You must first list exactly when you expect to receive money due to you. List incoming cash chronologically with source, and group those that are coming on a definite date and those coming at a variable date. Tally them up to get a total. This is your monthly income. Now list all your expenditures; bills, rent, gasoline expenses, etc. Then add an allowance for miscellaneous expenses. Tally them up, and you'll have the total of your monthly expense.

If your income exceeds your expenses, and you can save some money -- congratulations, you have a positive cash flow. If your expenses exceed your income, then it is time to put a stringent cash flow plan in effect. Cross out expenses you can do without such as dining out, expensive clothing, etc. If you have already reduced your expenses to a bare minimum, and your income still comes up short, it's time to find ways to make more cash. Sell items you no longer use such as an old car sitting in your garage, small gadgets like personal digital assistants, clothes and furniture that are gathering dust. You should also consider taking another job. There are a lot of part-time and freelancing jobs for those who choose to look for them and are willing to work additional hours.