Basics of Cash Flow Management is very important as it builds the foundation to empower you to have enough or extra money to use every month. Here are some easy steps that you should use to improve your own cash flow management:
1. Monitor your existing monthly expenses everyday for a period of about 3 – 6 months
2. Go through each item in your existing monthly expenses to discover what it is that you had spent your money on.
3. Write down a list on all your expenses and highlight those that you are able to reduce.
4. Pay yourself first by keeping 20-30% of your income into a different savings a/c. You will need to be discipline enough to ensure that you only use it for investment.
5. Set a budget for all your monthly expenses. Ensure that you keep to your budget so that you will not exceed it. Do verify that you have more income than your total expenses budget and savings needed.
6. Plan for all major spending of above USD$1000. This helps to make sure that you genuinely need to make the purchase, not impulsively. Therefore, you will be able to take note of the amount needed and can put aside some money monthly towards a fund to pay for your purchase when that fund have enough money.
After executing the above, most likely, you will have be able to have more money to be used for investment and that funds your financial freedom or retirement plans.
*Note that Assets are things that put money into your pockets and liabilities are things that takes money from your pocket!
Ensure that you have a positive cash flow every month! Download my Expense Tracker to see if you are able to achieve that.
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