TIP OF THE WEEK: WATCH YOUR CASH FLOW
TIP OF THE WEEK: Watch your cashflow.
Now, I don’t mean watch it flow out of your pocket. That seems to happen to all of us on its own. What I mean is keep tabs on what is going out and making sure it doesn’t exceed what comes in.
Simple concept right? You may be thinking, “She isn’t telling me anything I don’t know. Get on with it”. Here’s the thing. Do you really? How do you track your spending? How often do you actually balance your checkbook? Or do you consider checking your bank balance online as balancing your bank balance?
Everyone has their own way to manage their finances. It’s not my place to tell you what works best for you. But what I’m confident in saying, is a majority of us have no clue how much we spend every month. No clue at all. All we know is we either have money or we’re broke.
Try this. Take the next week to track where your money goes. You can do this as a business owner or individual. It takes cash to run a business and also maintain our personal lives so this is applicable for everyone.
Track every penny you spend. If you take money out of the ATM save the receipts of what the money is spent on. How many times have we taken a $100 bucks only to have it gone in 3 -4 days and have no clue where it went.
At the end of the week add up all the money you spent and take a look at where it went. You can either do this by running off your bank activity from your online banking, as long as you use your ATM and Online bill pay for everything or log it. Actually write it down. You will be amazed. When I do this exercise with my business and personal clients they are always astounded.
I practice what I preach. I look at my spending all the time. It’s easy to let it go. Last month I spent double what I had budgeted on personal items. Oppss… but those shoes were just too cute to pass up and that dress made me look two sizes smaller than I am. However, shoes and dresses don’t pay the bills so I cut the budget for personal items in half this month so that I’m back on track by the end of the month.
Once you see where your money is going I challenge you to take one area, such as eating out, coffees, after-work drinks – something that is an incidental - and cut it in half for the next three months. Take the money you save and put it in your savings account – again business or personal so you have that reserve we all desperately need at times. If you have all your ducks in a row and your emergency fund is well funded then it’s time to visit your financial advisor to see how you can have your money make you more money.
Remember this: Cash is king. Whoever has the cash is King.