Income Tells Part of the Story. Cash Flow Tells the Rest.
- Anne Legg
- 20 hours ago
- 2 min read
I recently shared why the first challenge in building the CU Power Starting Proof wasn't analyzing data—it was defining what we mean by "living paycheck to paycheck."
That conversation generated another question.
One that has become even more important.
Are we really trying to measure income?
Or are we trying to measure cash flow?
At first, they sound like the same thing.
They're not.
Imagine two members.
One earns $180,000 a year.
The other earns $55,000.
Traditional thinking would suggest the first member is financially secure while the second may be struggling.
But what if the first member consistently reaches the end of every pay cycle with little or no available cash?
What if every paycheck is already committed before it arrives?
Now imagine the second member.
They carefully manage expenses, consistently save a portion of every paycheck, and gradually increase their account balance each month.
Who is really living paycheck to paycheck?
That's when we realized something important.
Income explains earning.
Cash flow explains behavior.
And behavior may tell us much more about financial resilience than income alone.
That's why our work has shifted beyond simply identifying deposits.
We're now asking questions like:
How consistent are income deposits?
What happens to account balances between paydays?
Is there evidence of savings accumulating over time?
Does the member consistently reach a near-zero balance before the next deposit?
Are deposits supporting long-term stability or simply replacing money that has already been spent?
These questions move us away from demographics and toward understanding financial patterns.
And that's exactly where I believe credit unions have an opportunity.
Because if we can begin recognizing patterns—not just balances—we can better understand where members may need support and where credit unions are already making a difference.
The more we build this methodology, the more convinced I become that we're not trying to classify members.
We're trying to understand the financial journeys they're navigating every month.
That distinction matters.
Because the goal isn't to label someone as living paycheck to paycheck.
The goal is to understand where a credit union has the greatest opportunity to fulfill its mission.
One insight has become increasingly clear.
A paycheck is an event.
Cash flow tells the story.
Next week, I'll share another challenge we didn't expect:
How do you determine whether a checking account is actually a member's primary financial relationship?
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