When we're talking about a free cashflow definition we're NOT talking about a totally new thing. We're still talking about cashflow. But just a specific part thereof.
Let's start off by looking at our Cashflow Pipe.
We've already said that cashflow is the money flowing into and out of an account. That's true whether we're talking about you or your business.
But for most of us money flowing into our accounts come from paycheck income -- W(ork) money!
But where most of us royally mess up is when we believe all incoming money is there to spend as we like. So what you're effectively doing is to increase E(xpenses) until it equals W(ork) money.
Although you may think so, the truth is... that's not true! And that's what our free cashflow definition refers to.
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How to create free cashflow
Let's just assume you earn US$10000 per month -- W(ork) money flows into your account.
Now, "You" control how much money E(xpenses) take from your account.
These E(xpenses) include many different compulsory rates, taxes and levies. And then there's also many other day-to-day expenses and luxuries taking money from your account.
The sad thing is...
You regularly allow Expenses to take every single penny from our account... leaving NO Free money!
You literally take $10000 (or sometimes even more) from your account.
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Here's the important part...
Free cashflow can only be created by controlling Expenses, and...
Keep Expenses less than amount of money in your account!
The money that remains in your account is the F(ree) cashflow bit. It's that part you can truly use to create a bigger cashflow stream into your account.
But now you may be asking why this free cashflow bit is so important. Click here to get the answer or send for the best cure for a permanent money stream by clicking here.
Once you've created Free money the biggest skill is then to know how to reuse it to increase the cashflow into your pipe. Click here to learn about some of the assets that continues to put money in your pocket - regardless of whether you work or not.
Source : http://www.cashflowclever.com/freecashflowdefinition.html
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