Personal Cash Flow Management
What is Cash Flow?
In simple terms, your personal cash flow is the difference between what you earn and what you spend.
Nothing has a greater impact on our wealth than the management of our cash flow. Our spending is the only thing we have complete control over. If you spend less than you earn, you build wealth and vice versa. Any improvement in your personal cash flow surplus increases your ability to reduce your debt and/or build your wealth.
There is no use in getting excited over an investment (over which you have no control) which gives you a $5,000 return when you blow an extra $12,000
per annum on purchasing items which have no long term value. That is not to say that we should not spend on items which give us immediate or short-term
satisfaction. It does not matter how much we earn, if we spend it all (worse still, if we borrow more than we can efficiently service, whether it be for investment or personal purposes), we will never build enough personal wealth to enable us to retire with any degree of financial independence,
if we can afford to retire at all.
We want to help you get the balance right. In order to do this you require a clear understanding of your ‘Fixed’ or ‘Living’ expenses, whilst having enough money to maintain an enjoyable ‘Lifestyle’ and still have ‘Fun’. If you get the balance right now you should be able to save what you need for tomorrow, or your ‘Future’ goals, ultimately being able to retire with enough money to sustain the lifestyle you desire.
The key to maximising the effectiveness of your wealth-building or debt reduction is to run your household like a business. Successful businesses have a strategy. They set specific goals and objectives, they have budgets, targets, they benchmark their progress and they are accountable to their board of directors. They do not hire people and purchase machinery simply because they can. They understand the future implications of their present spending decisions. Once the future implications of your lifestyle goals (holidays, cars, children’s education, renovations etc.) are known, you can make your spending decisions with confidence, knowing that you can remain on track to maximise your retirement income outcome.
We now have this wonderful new app to help you get your financial world sorted. We would love to personally introduce it to you! Just get in touch with us to arrange a time to chat.
At Strategic Planning Solutions we are all about Planning for Life, we aim to assist you in ‘understanding the future implications of your present spending decisions’. We can assist you to prioritise your goals, set achievable targets and develop a personalised, flexible strategy to map out your financial journey through life. The long-term success of your outcome is supported by our ‘Cash Coach’ programme, which can help you remain
If you would like to find our more about how you may be able to improve the way you manage your personal cash flow, please contact us today arrange a time to meet.
Reserve Bank of Australia (RBA) governor Michele Bullock has decided to hold interest rates at 4.35 per cent....Read more
New Reserve Bank of Australia (RBA) governor Michele Bullock has raised interest rates to 4.35 per cent. In her second m...Read more