PERSONAL FINANCE 12: THE WORKINGS & USES OF A PERSONAL CASH FLOW STATEMENT WITH NO EARNING ASSETS 3

Consider the case of an individual or household with no financial or physical Earning Assets, whose only Earning Assets are Manhours, where the Salaries or Professional Fees have related Direct Costs which do not leave sufficient Cash to meet Expenses:

In the previous post, we started by first looking at the possibilities of maximizing Manhours or the value of the Manhours.

As Direct Costs (expenses incurred in earning the Salary or Professional Fee from Manhours) directly impact on the adequacy of Cash to meet Expenses (i.e., the Outflows), we should look at the efficiency of our Direct Costs.

A major item of Direct Costs, especially for those on a daily wage, is the cost of going to and from the place of work. In the Philippines where many daily wage earners live far from their workplace and the cost of transport to and from the place of work eat up as much as 70% of the daily wage, the frequent solution is to rent a cheap place near the workplace practically for just sleeping. Others ask the permission of the employer to sleep at the workplace.