Definition
Money in minus money out over a period: income minus all spending. Positive cash flow builds net worth; negative cash flow drains savings or grows debt, whatever the income level.
Why it matters
Net worth is the scoreboard; cash flow is the game. A household with positive cash flow can absorb shocks, fund goals, and invest. One without it is fragile no matter how much it earns.
Example
Take-home pay of $6,200 against $5,700 of total spending is +$500 a month of cash flow. That $500 is the raw material for the emergency fund, the 401(k), and every goal on the list.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.