If you wish to invest in shares, the first thing you are going to need is cash! Althoug this may seem obvious, there are a number of people who make the decision to invest in shares and do all the research but suddenly find they have no extra cash to purchase them. So where can you get the investment money that you need? Unless you have a big inheritance coming to you soon from some close kins of yours, you may have to look elsewhere for the cash. However, if are one of those that have more money going out than coming in, you have a negative cashflow and you won't have any investment money. Before you say you can just borrow money, no bank will loan you money if you can't pay the loan off due to negative cashflow?

Fortunately, there are some ways of figuring out which direction your cashflow is heading:

1) What form of money is coming in? This is simply your sources of income. While your job is the obvious main income source, you also need to think about what else might be coming in. Do you do any tutoring? what about odd jobs? What about the interest from other investments or bank accounts? You need to think about all the potentials for income coming in. Right now, add up all those sources of income and come up with a figure.

2) What kind money is going out? This is going to take a bit of time, but it is important that you get this step right. Write down all the things you spend money on, which will be all your expenses. Expenses can be divided into essential (such as rent/mortgage, food, power bills, etc) and non-essential (such as coffee with the girls every Tuesday afternoon, beers with the boys every Friday, etc). By dividing them into these categories, you can get an idea of which expenses you reduce without reducing your lifestyle. However, it is crucial that you make as complete and detailed a list of all your expenses. Once this is done, add up all the expenses and come up with a figure. (Remember, rent and food is essential, cigarettes are non-essential!)

3) What's left? At this stage, figuring out your cashflow is a matter of subtracting your expenses from your income. Pretty easy math eh?

What's next?

If you have a positive number, this means that more money is coming in than is going out. Congratulate yourself, as there are fewer and fewer people are able to claim this. This means that you can start allocationg some (not necessarily all) of the excess investment money in stocks. Even if it means investment money of only $25 - $50 a week, so long as you do it regularly it will gradually add up!

If you come up with zero, it means that the amount of money coming in is the same as the money going out. While it doesn't mean you are gradually going broke, it also means that you are not going forward either and most importantly, you won't have any money to invest either. Now is the time to look at your non-essential expenses and see which ones you can get rid of so you can start your stock investment program.

If you came up with a negative number, this means that your cashflow is negative and you have very little investment money to spare. In a nutshell, you are gradually going broke, so it is now Situation Critical! You need to have a serious look at your expenses and see what can be eliminated. For some people, spending $20 a week on coffee may not seem a lot, but it may mean the difference between a negative cashflow and a positive one. Believe me, not going to the pub on Fridays and in effect saving $40-$50 a week is not going to kill you! However, spending $20-$30 a week on cigarettes can!

So, why not take some time to analyse your current cashflow. Is it positive? If so, is it "flowing" fast enough? If you want to increase your cashflow or stop your negative cashflow from getting worse, you can either increase your income by getting a second or better paying job, or cut down on your non-essential expenses. By getting your cashflow in a positive direction, you will be well underway to beginning a successful stock purchase program with your investment money. Good luck!

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