Prerequisite

2. Think in terms of Cash Flows

It’s very easy to make wrong financial decisions when not looking at your monthly Free Cash Flow (FCF). What is Free Cash Flow?

<aside> 🧑‍🏫 Free Cash Flow represents the money free to be assigned to your goals: savings, investments and debt repayments.

Free Cash Flow = Money in - Recurring expenses - Variable expenses

</aside>

While the formula is simple, few people use it to plan their finances, often leading to bad surprises. With Nova, you can directly see your past and forecasted monthly Free Cash Flow.

When planning ahead, you can assign your forecasted monthly Free Cash Flow into:

• Saving for a goal
• Investing
• Repaying debt
• Increasing your safety net

<aside> 🧑‍🏫 Savings and investments aren’t accounted for as expenses.

</aside>

Example

Nova forecasts you’ll have £700 of Free Cash Flow next month. You can use them to:

• Save £400 for your next holidays
• Increase your safety net by £100
• Invest £200