Cash flow management: How do you compare?

Have you ever thought; how did that person from high school afford their first home at 25?

• Did they skip meals?

• Did they work multiple jobs?

• Were they left a large amount of money from an inheritance?

What did they do differently? Well, they simply mastered the technique of cash flow management.

What is cash flow management?

The art of cash flow management is being able to determine where your cash comes from and where it goes, and then allocate any ‘leftover’ money towards achieving your goals. For me, it’s saving towards a ski trip to New Zealand. For some of my friends, it’s saving to buy their first home.

Mastering cash flow management is a skill everyone needs. It’s the first step to achieving your financial goals.

Mastering cash flow management

Here’s how I approach it:

1. Set a clear and realistic goal with a timeline – What do you want to achieve from saving money?
2. Track money coming in and money going out – I like to do a budget. This helps with identifying where your money comes from and where it goes.
3. Be honest. Once you have identified your goal and have an understanding of your current situation, you’re already on your way to achieving it.
4. Don’t be emotional. Avoid unnecessary or spur of the moment purchases. This is often more difficult than it sounds, but think of the below;
   • Don’t overspend
   • Don’t procrastinate
   • Can I comfortably afford this purchase?
5. Trust the process. There are no shortcuts, and nor should there be. This is the exciting step, you can start to see how your cash flow is improving, how it reacts to certain actions and what you can achieve within a period of time.

In summary

Financial success is different for everyone, for me, it is being able to make decisions comfortably knowing how it will affect my overall position.

There is no miracle cure to be like that person from high school as we’re all at different stages. No matter what stage you are at, financial planning is for everybody.

Next steps

If you are interested in improving your cash flow management techniques and would like a copy of the budget spreadsheet I use to manage my finances – please complete the following booking form and I will be in contact with you.

The advice provided here is general in nature only as, in preparing it we did not take account of your investment objectives, financial situation or particular needs.