Cash flow planning roadmap
April 26, 2023
We all know that we need to live within our means and save for the future, but with all the competing demands for cash flow, it can be overwhelming. It’s something that income level people struggle with. Since I am a lifelong learner, I decided to discuss her flow plan with Carolyn Burley. untangle the moneyBelow are the top five takeaways from our discussion.
- Start with the right mindset!
- Allows you to focus on what really matters, not your budget as a constraint.
- Review your spending over the past few months and glance at your bank account and credit card statements to see what made you happiest with your money and what you regret.
- Use our tools to get to the truth about your spending.
- Your spending is a complex web of information. With your financial data flowing to so many places (debit cards, credit cards, Paypal, Zelle, etc.), it can be difficult to keep track of how much you’re spending.
- Tools allow you to gather all your transaction information in one place and get the truth about what you spend your money on.
- There are many tools with different set-up tasks, maintenance tasks, and costs. There is something for everyone. (e.g. Mint.com, YNAB, Tiller)
- First, figure out how much you need to spend, then plan for where you want to go.
- Calculate your take home after tax and after all deductions so you know how much money you have to spend and save.
- Compare how much you actually spend and save with where you want to go. Create a plan for your money and think about how you will get from where you are now to where you want to be.
- Make sure you are setting reasonable goals.
- Don’t forget to list your annual expenses (it’s easy to forget these when planning).
- Automate your cash flow as much as possible.
- It may help to allocate money to different categories and then use it up. Set up a system of dedicated bank accounts (e.g. monthly bills, annual bills, discretionary spending, emergency funds, vacation funds, etc.).
- Automate the flow of money between different accounts.
- Aligning your invoice due dates within the same 2-3 days reduces the number of invoices you process throughout the month.
- Have a rule of thumb every time you get extra money (eg 10% for my emergency fund, 10% for vacation funds, whatever their priorities are). with extra money.
- Ask for help if you need it!
- If you don’t know where your money is going, you can hire a professional.
- A financial coach can help you get through the hardest part, the initial setup phase.
- Having an accountable partner keeps you on track.
We hope this article has inspired you to work on your spending plan. Good cash flow planning can make life less stressful and more in control. It also helps you spend your money on the things you enjoy most in life. I personally try to align my spending with three financial priorities: education, travel, and hobbies. Whenever I have to make a difficult spending decision, I review these priorities.
Good luck with cash flow planning. Please feel free to contact us. Tell us about your successes and obstacles.