In this chapter, you learned that companies prepare a statement of cash flows in order to keep track of their sources and uses of cash and to help them plan for their future cash needs. Planning for your own short- and long-term cash needs is every bit as important as it is for a company.

Instructions

Read the article (Financial Uh-Oh? No Problem) provided at

www.fool.com/personal-finance/saving/index.aspx, and answer the following questions.

(http://www.fool.com/personal-finance/saving/financial-uh-oh-no-problem.aspx?source=iscsithlb0000001)

Required:

[a]Reflect how does the concept of cash flows help you with your personalcash management.Describe the three factors that determine how much money you should set aside for short-term needs.

[b]How many months of living expenses does the article suggest to set aside?

[c]Estimate how much you should set aside based upon your current situation. Are you closer to Cliff's scenario or to Prudence's?Why?