Why is excess cash flow important in financial planning?

Question

Quizplus · Accepted Answer

Excess cash flow is important in financial planning because it can enable you to reach long term financial goals, such as retirement or saving for a down payment on a house. It can also be useful for unexpected expenses, but its primary purpose is to help achieve financial objectives. Option A is incorrect because excess cash flow should be put towards financial goals, not luxury items. Option C is partially correct, but emergency funds should be separate from excess cash flow. Option D is incorrect because having excess cash flow does not necessarily eliminate financial stress, as financial stress can come from many sources outside of money.

Why Is Excess Cash Flow Important in Financial Planning