Cash flow management…
Another good old fashioned financial buzz word that gets thrown around and most people probably don’t really get what it means. Which is ok, and understandable, because we don’t get taught this stuff at school!
Today I wanna go through the best way to manage your personal cash flow, which means to ensure that what’s coming in each pay day is being put to it’s best use, all the while making sure you have enough money available when your bills and expenses come along.
Nobody likes it when the annual car insurance bill arrives, or the quarterly body corporate notice. And it often feels like the monies not there, and you end up having to scrimp for the next couple of weeks in order to cover it. The cycle only repeats itself a month later when the air conditioning stops working and the guy who comes and fixes it sends you bill for $800 the next day.
It’s tough to get ahead if you don’t have a good system in place to manage your cash flow.
The Easy Way To Manage Your Money
Start by setting up a cash hub. This is a bank account that receives all of your income. The idea is that everything sits in this account until you need it.
Next you’ll need a spending account. This is the account that basically has your weekly play money, along with any of the basic living stuff that gets paid weekly, like public transport and groceries. You’ll need to work out how much you can live on each week, and set up an automatic transfer from you cash hub to your spending account.
And lastly, don’t forget your savings, and an emergency fund. Use high-interest online savings accounts to save for holidays or whatever your goals may be. Set up regular transfers to these accounts to ensure all bases are covered.
Why It Works
The idea is that all your irregular bills that come in will be covered by whatever is left over in the cash hub, but you’ll need to complete a budget so that you know everything adds up! In my 8 week Money Makeover program we go through this process in detail, stepping you through the budgeting process and ensuring it all stacks up.
Sounds like a bit of work…but if you’re committed to securing your financial future and reaching your goals, which is the most exciting bit, it’s well worth the time.