Ever find yourself without money at the end of the month though things looked good when you started out? To enjoy and grow your wealth, you need to manage it properly. And a key aspect of this is implementing a solid plan for personal cash flow management.
Cash flow refers to the inflow and exit of money from your personal budget. Cash flow management is the framework you need to put in place to manage that budget so that the flow stays balanced. The goal is to have a positive cash flow where you have more money coming into your budget than exiting it – money that you can use to wisely grow your wealth. Each individual's cash flow management plan will be different depending on their needs but it is important to have a basic understanding of how budgets work, what debt repayment entails, and the best way to save to ensure that you manage your cash flow appropriately.
Need help? Be proactive in taking control of your finances. Talk to your financial adviser about how to develop and implement a budget and financial management plan.
Top tips for effective personal cash flow management
1. Keep your debt down and your credit rating up
Debt (and the high interest rates that come with it) eats away at your finances and is best dealt with as soon as possible. Having a good credit rating can reduce your interest rates which will in turn help your cash flow.
2. Reduce your costs
Take a look at your household expenses and see where you can cut down. The idea is to have more money coming in than going out so that you can start saving and putting money away for retirement and an emergency fund.
3. Revisit your insurance
Revisit your insurance needs every year to ensure that you are not spending money on unnecessary or outdated insurance plans that you no longer need. Over-insured? Scale back and divert that money into savings.
4. Mange your spending
If you don’t have the cash to spend on extras, don’t spend it (and don’t use credit as that’s not cash flow, that’s debt). This may be tough to do but it’s worth the financial freedom you’ll gain in the long run.
5. Invest in passive income
Start as soon as you can but definitely start looking at ways to bring in money that don’t require you to work. Remember, you won’t be able to work forever. Alongside a solid retirement plan, you need to start thinking about generating passive income through investments that build on the power of compound interest.
Looking for a reputable independent financial adviser to help you manage your finances so that you can grow and enjoy your wealth? Talk to us. As professional independent advisers with experience and expertise in wealth and investment management, we can help you make the most of your money today and into the future.