Cash Flow Planning

Would you say you have a healthy relationship with money? You probably like it. But, does it like you back? Like in all associations, your relationship with money should begin with respect. Value it for the tool it is. Do not worship it. Do not discard it. Respect it… My grandfather had a healthy respect for money which I discuss in my Ted Talk, Retirement – Longevity and Security. Like all of us, he had unique needs and desires.  Some people balance inflows and outflows in a struggle to cover day-to-day expenses where successful planning could mean paying all of the bills for the day without going further in debt. Alternatively, others, like my grandfather and clients I serve today, use tax, debt management and other strategies to help grow wealth. Whatever your lens, the core benefit is the same. Whether your goal is maintain or build your financial position, cash flow planning and developing a spending plan can help. The better you become at it, the more your wealth can grow! Understanding money and planning out your cash flow puts you in greater control contributing to your overall financial well-being.

In Cash Flow Planning:

  1. Define your life goals. This means, understanding your purpose – “why” you get out of bed each morning. Your cash inflows and outflows should reflect these life goals.
  2. Capture your inflows and outflows. To identify gaps and opportunities, project your cash flow.
  3. Review your expenses.  In addition to understanding your expenses and their reasonableness, assess whether they are aligned with your life goals.
  4. Pay yourself first. After understanding your inflows and outflows and closely examining your expenses, you will likely find there is more income to sock away to savings immediately as it is received.
  5. Create a spending plan. Then, you can compare it with actual results to see variations to be sure your expenses are in alignment with your goals.
  6. Get debt under control. After all, debt must be manageable before you can really start saving.
  7. Run the numbers. Before making decisions, analyze. Should you purchase home with a mortgage versus rent? Should you purchase the auto for cash, lease it or take out a loan?
  8. Plan for risks – and opportunities. While it’s important to consider potential barriers to achieving your goals throughout every aspect of planning, be sure to be on the lookout for opportunities too. For example, opportunities for tax minimization can be found across all areas of planning.

Plenteous Financial Wellness Wheel

Plenteous Financial Wellness Wheel

Understand what the wheel is all about and explore the spokes to identify the planning gaps you need to fill.