Why Tracking Your Monthly Cash Flow is Non-Negotiable

If you’ve ever tried to build something, you can't ignore the fundamentals or you will fail.

The end.

That goes for a fitness routine, business, piece of furniture or military strategy. 

Skip the basics and everything starts falling apart sooner or later.

The same goes for your finances.

And the hilarious thing is that we ignore this so consistently at every income level.

I see it all the time in the Foundation Mastermind where we have people making $40,000 a year and $400,000 a year.

With personal finance, the fundamental is your monthly cash flow.

Ignoring it is like building a house on quicksand. You may not notice at first, but eventually, things will collapse.

Let’s break down why tracking your monthly cash flow is essential, the pitfalls of ignoring it, and how automating this process can save you time and stress while building a solid financial foundation.

What Is Monthly Cash Flow?

In its simplest form, cash flow is the money coming into your accounts (income) and the money going out (expenses) each month.

It’s your financial heartbeat.

Knowing exactly where your money is going allows you to...

• make smarter decisions
• avoid surprises
• achieve your financial goals

If you don’t know your cash flow, you’re flying blind and will fail at building wealth as quickly as you want to...or at all.

The Pitfalls of Ignoring Your Cash Flow

Imagine you're a pilot flying a plane, but instead of paying attention to the instrument panel, you just assume everything’s fine because the plane is still in the air.

That’s what ignoring your cash flow is like.

You might get by for a while, but sooner or later, something’s going to go wrong—and by then, it might be too late to course-correct.

Here’s what happens when you ignore your cash flow:

• Missed Payments: Forgetting when bills are due or not having enough in your account to cover them leads to missed payments. Missed payments lead to late fees, penalties, and dings on your credit score.

• Overdrafts: Without keeping an eye on your cash flow, you’re more likely to overdraft your account, which racks up unnecessary fees and stress.

• Debt Accumulation: If you don’t know where your money is going, you’re more likely to spend on credit cards, accumulating debt that you could’ve avoided had you budgeted for those expenses in the first place.

• Financial Anxiety: One of the worst repercussions that can have a real impact on your health is financial anxiety and depression. Living without knowing how much money you have or where it’s going creates a constant low-level stress. It feels like being a few steps behind all the time and gives a constant feeling of being out of control.

• Missed Opportunities: Having a solid understanding of your cash flow helps you identify when you have extra money to invest, save, or pay off debt faster. Without this knowledge, you could miss out on those opportunities to build wealth and take chances on opportunities.

Automating Cash Flow: The Key to Peace of Mind

Here’s the good news: you don’t have to sit down with a calculator and receipts every month to track your cash flow.

By automating this process, you save time, reduce errors, and make sure you’re always on top of things.

Here’s why automation is a game-changer:

• Set It and Forget It: By automating bill payments, you never have to worry about missing a due date. No more late fees, no more penalties, just peace of mind knowing everything is covered.

• Track Spending Effortlessly: Use apps that sync with your bank account to automatically categorize and track your spending. This way, you’ll always know where your money is going without the manual effort of logging every purchase.

• Avoid Human Error: When you try to manage everything yourself, mistakes happen—whether it’s forgetting a bill or miscalculating your budget. Automation eliminates these errors and ensures accuracy every time.

• Build a Strong Foundation: Automating your cash flow not only saves time and reduces stress, but it also allows you to focus on bigger financial goals like investing, saving for retirement, or paying off debt. With the basics covered, you can start building real wealth.

Michael Jordan, the greatest basketball player ever, used to shoot 100 free throws after practice. Why?

Because the fundamentals matter.

And when it comes to your money, cash flow is as fundamental as it gets.

Write it all down (on a spreadsheet), then automate it, monitor it monthly and watch your financial wealth grow.