Prosperity Pathways | Tracking Your Cash Flow & Understanding Investing Styles

Getting Started with Cash Flow: Your Financial Foundation

How much money do you have left at the end of the month?

It’s a deceptively simple question—and one worth answering. Whether you’re starting your career, buying a home, or growing your family, lenders and financial professionals will look into your cash flow position. But more importantly, so should you.

Cash flow is the backbone of your financial life. It helps you stay on top of your bills and make intentional choices with your money. A simple spreadsheet can help you track cash flow.

Not a spreadsheet person? Don’t worry—there are automated tools that can help. Let’s dive in!

What to Track

To begin, make sure you can identify these essential categories:

• Income: Include your expected monthly income, not just your salary. That could be side gigs, freelance work, or rental income.
• Fixed Expenses: These don’t usually change much month to month—think rent or mortgage, utilities, subscriptions, and loan payments.
• Variable Expenses: Groceries, gas, entertainment, dining out: these expenses can fluctuate with your choices and lifestyle.
• Debt Payments: Credit cards, personal loans, and student loan minimums all go here—even if they’re also part of your fixed expenses.

Build Your First Spreadsheet

Use Excel, Google Sheets, or a budgeting app—whatever works best for you. The important thing is to choose a method you want to return to and keep using. At its simplest, your formula is:

To simplify this, I’ve created a templated spreadsheet you can copy and use. You can download it here.

Income – (Fixed + Variable + Debt) = What’s Left

Got some cash left? Great! If your number is negative, that’s okay—it just means you need to reevaluate and adjust. Start with your variable expenses: maybe a subscription can go, or a goal gets paused. This isn’t about judgment; it’s about clarity. And clarity gives you power. 

Review It Monthly

Once you set up your spreadsheet, set a reminder to update it monthly. Like water flow, cash flow is organic and will naturally reflect the changes that come with life. Did your expenses go up? Is your side hustle bringing in more? What’s realistic now, given what you’re working with?

Regularly updating your cash flow can also prepare you for big milestones. Whether you’re applying for a loan or saving for a new car or home, you’ll always have a clear snapshot of your current financial reality.

Active vs. Passive Investing: What Fits You Best?

If you’ve spent any time learning about personal finance, you’ve likely come across two terms: active and passive investing.

At first glance, it sounds like a decision you have to make, but it’s more like a personality type than an either/or decision. Whether you’re more active or more passive, investing is about choosing the right mix given your comfort with risk, your personal goals, and your investing timeline.

What’s the Difference?

• Passive investing is a long-term strategy. It typically involves buying and holding your investments over several years and weathering various market ups and downs. Think low-cost, steady, and hands-off.¹
  
  
• Active investing is more hands-on. It is like choosing between custom-made clothing and buying something off the rack. Just as a tailor customizes clothing to fit your exact measurements and preferences, active investing allows us to build a portfolio designed for your unique financial situation. While some investors prefer ready-made solutions, others value the personalized approach and ongoing adjustments with active management.²

Ask Yourself These Questions

• How much time do you want to spend on your investments?
  Some approaches are automated, while others may require regular attention or maintenance.
• What’s your comfort level with risk and volatility?
  Higher-risk strategies may offer the potential for higher returns, but they also come with a potentially greater feeling of uncertainty that not everyone wants to live with.³
• Do you have specific goals that you're working towards?
  We can help tailor your mix of investments with your long-term goals in mind.

Can You Do Both?

Absolutely. Many people combine passive investments and active strategies in retirement accounts and other investments. Combining both might be appropriate depending on where you are and how involved you want to be.³

Whether you lean passive, active, or somewhere in between, the most important thing is having a strategy that feels right for you. We can help by taking your vision and helping you build a path to get where you want to go.

^{1. Business Insider, “Passive vs. Active Investing: Which Strategy Is Right for You?”}

^{2. FINRA, “Active vs. Passive Investing,” May 2025.} 

^{3. Business Insider, ibid.}