How Cash Flows

by John Garfield

Multiplying Wealth

Learning to multiply finances and break out of poverty comes in several stages. We are a little prone to think wealth comes by a miracle: the blessing of God raining down out of heaven. Money grows on the tree of persistence. The mindset that breaks poverty is wisdom and work. There are no shortcuts. In fact, stewardship is a character issue that goes beyond tithing. We've been taught that God owns everything and we just have to give him back 10% and everything will be fine. I've actually seen businessmen ruin their businesses by tithing on the gross, by faith of course.

Real stewardship is learning to manage money so that it multiplies. The essence of many offering exhortations that we've all sat through is that if we give money away it multiplies. Giving is good, but wealth is not multiplied by giving it away – sorry. There are times when we are afraid to get to involved with money for fear we'll be contaminated by its filthy nature; or, we may fall in love with it!

"No servant can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." Luke 16:13

I want to suggest that the people who serve money are those closest to poverty. They give their time and energy every week trying to make enough to survive. They are never far from being unable to pay the next bill and barely survive from paycheck to paycheck. That is the bondage of serving money. Let's talk about the progression from poverty to freedom.

Stage 1) Stop the bleeding!  Most of us can recognize ourselves in this verse:

You have planted much, but have harvested little. You eat, but never have enough. You drink, but never have your fill. You put on clothes, but are not warm. You earn wages, only to put them in a purse with holes in it." Hag 1:6 NIV

Poverty is an attitude that causes money to flee from us. The root cause is that we don't manage it well as stewards of what we do have. The very first stage is, What are you doing with what you have?” That is the essential first question of stewardship. Not what happened in the past not what we hope for in the future. But, what are we doing now with what we have? That's a question God is asking! That is the question in the parables of the talents and minas. No matter how small your present income is, there is a way to faithfully steward it into something more and learn to multiply it. Would you like to know how?

Cash Flow

Meet Larry -  Larry Tyler spent a 37-year career as a loan officer in banking, helping people learn to multiply finances in business. As soon as I heard the emphasis of his consulting message, I asked for an interview with Larry, you will enjoy it. What was the message? Cash Flow!

Here is the foundation for multiplying wealth, understanding cash flow. It's very simply a concept (counting the cost) from the accounting world that we all need to adopt for our personal finances as well as business finances.

Cash flow is an accounting term that is simply a monthly summary of income and expenses, usually done on an EXCEL spreadsheet. Both business and personal finances can be tracked and managed with cash flow. This tool can be used to track the prior 12 months of income and expenses and to project 12-24 months into the future. Cash flow can (and should) be used to track both personal and business income and expenses. It helps reduce financial surprises and it will help you stop the bleeding of poverty.

Cash Flow is more important than profit; businesses fail and individuals go bankrupt because they run out of cash and simply can't pay the bills. Cash flow is a budgeting tool that can be used to remind us of annual expenses and seasonal fluctuations in expenses. For example, taxes are due once a year, insurances twice a year. Income may be the same every month if you have a job. However, if you work on a commission or in a seasonal industry, like agriculture or tourism, your income may vary from month to month.

Here's how:  You don't need to be an accountant to manage your finances.

Make a list of your income and expense categories and put them in the left column. See the examples in our Cash Flow Primer.

Make a column for each month and simply show the income next to your income categories and the expenses in the appropriate month for your expense categories.

Add up the total income for each month and the total expenses for each month. Cash flow for each month is simply income minus expenses.

Here's why:  Understanding how much money you have and where it goes every month will help you make a realistic plan to save and multiply money. People who don't budget their finances with cash flow simply get a surprise every few months that keeps them broke and in the bondage of poverty. In reality, there are no surprises if you give your finances a little thought. Extend your monthly columns out into the future a year or two and use the previous year or two to remind yourself of the kind of expenses that may show up. Update those projections into the future at the end of each month based on your prior actual income and expense. Multi-million-dollar businesses are managed exactly that way. Once you learn how to manage money instead of letting it manage you… guess what? You're a candidate to run a multi-million-dollar business. Thank you, Larry!

The Spiritual Side

Cash flow is a tool that puts you as head over your finances instead of the tail. Instead of your finances managing your actions, you are now managing your finances and your actions, too. That ownership, or responsibility, to be a good steward, or manager, of what you have is spiritual. It releases God's hand to add more.

Take the talent from him and give it to the one who has the ten talents. For everyone who has will be given more, and he will have an abundance. Matt 25:28-29 NIV

The Feeling

Let me share a secret from the business mountain: “It's fun to make money.” For Kings it's not only fun, it's spiritual. Multiplying wealth positions us for ministry. It is the means by which the Kingdom is built. Try it. You'll like it!

Promise me this:  that you won't feel guilty for possessing your inheritance and having enough money to do your part in building God's Kingdom.

John Garfield