Stock vs flow

A stock is an amount that accumulates and sits — water in a tank, money in your asset base, your net worth. A flow is a rate of movement — income arriving, expenses leaving. Most people manage flows because flows are visible and emotional; practitioners judge every decision by what it does to the stock’s productive capacity. The distinction comes from systems thinking (Donella Meadows) and is the grammar of this whole course.

First used in: 0.2 · Your money as a system