Cash Flow will make or break your financial health – this is why
No available cash = financial opportunities come to a standstill
When you have no available cash flow, these are some of the common problems that most people experience:
- Cannot pay financial responsibilities like car payments, house payments, debit orders or credit card payments
- Cannot maintain household or family expenses like basic food needs
- Cannot go out with friends or do related recreational experiences
- Cannot enjoy financial opportunities that come your way
- See at a glance your amount of money coming versus going out
- Keep track of your latest transactions (especially when you don’t get an SMS of the transaction
- See what you are spending money on
- Update your budget to reflect your expenses still coming up for the month
So, how can you use the above information to create a better financial future for yourself? We’ve compiled some of the simplest steps to improve your cash flow below!
Stop spending more than you earn
This step alone will take your personal finances from rubbish status to healthy status! This is the most important step to reverse the debt cycle over one’s life. Use the Fincheck MyFinance Tool to compare the amount of money that has come in versus the money that is going out.
Revisit your expenses, cut some out, make others cheaper
Are you spending money in areas where you can start saving it towards a positive cash flow? Think of spending patterns in your life like fashion shopping, coffee shops, takeaways, and recreational experiences. Then, take a look at the amount you spend on things. Are there cheaper alternatives that you can start using?
This includes items like:
- Cheque Cards
Allocate money to an emergency fund and savings
A key strategic move towards a healthy cash flow situation is to put money towards an emergency fund before you spend any money at all. Follow that up with a little extra portion per month towards a savings account. This can be the same account, but the idea is to fill it up like a bucket under a leaking roof (or running tap if you’re disciplined enough!).
Allocate money to your responsibilities first
Many South Africans spend the money that should have gone towards things like house payments, debt and other living costs on other things. These expenses are often impulsive (like the latest sale) or spontaneous (drinks with friends). This leads to increasing credit card limits to cover the responsibilities that come after this. Or, taking out personal loans to cover the increasing debt. As with an emergency fund, put the money somewhere you cannot spend it until the debit order goes off! And when you’re left with little else to spend on lifestyle expenses? Well, that’s where the following comes into play!
Make some extra money
Make more money by leveraging the skills you have towards some extra money. Who knows what will come out of it – maybe your first ever business? Or, work hard towards that next promotion that is within your reach!
Set some goals to keep doing the above
A clear vision and goal will help you to work towards a healthy cash flow situation. It will keep you motivated to apply the above steps! Think about the things that bring you personal fulfilment and make them part of why you’re tackling your cash flow.
We trust the above steps and the Fincheck MyFinance Tool has inspired you to start building a better financial future with our help! If you have a moment, we would appreciate it if you can send this along to a friend that can use the above tips.