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Controlling the Cash Flow

cash flow

Money comes and money all too quickly goes. But if you are not keeping track off the flow of your bank account, you are making a pretty simple financial mistake: no cash-flow control. And it is something that will end up costing you dearly.

With Christmas approaching, there is no better time to organise your family's financial plan and to manage those seasonal expenses. By getting on top of the boring day-to-day transactions that dictate your bank balance, you will find that your monthly budget will start to run itself, leaving you more time and money to spend on life's fun stuff. 

You will:

  • Save money - by not slipping into the red, you will save on bank charges and avoid having to pay high interest rates. Most utility companies also offer prompt-payment discounts. 
  • Save time - automatic payments and direct debits mean you will spend less time online banking and shuffling piles of paper bills each month.
  • Stop worrying - by knowing down to the last cent how much you have to spend each month, it will help you match your spending to your budget, leading to fewer sleepless nights stressing about the state of your finances. 
  • Start saving - a financial roadmap will help you navigate a long-term savings plan.

There are five easy stages to managing your cash flow, the hart part is making that first step.

  1. Start your plan - set aside a quiet half-hour, grab a pen and paper and write down what you have coming in every month and what you need to pay out.
  2. Look ahead - plan for a whole year. Include every essential utility and bill: rent/mortgage, water and electricity, rates, insurance, school fees, work-travel/car costs etc.
  3. Bank clever - set up different bank accounts: rent/mortgage, bills, savings and your everyday living expenses. After you are paid each month, move your funds into your different accounts, and leave the money there.
  4. Direct debits - ensure all your essential bills are paid using automatic payments. Big bills, such as insurance, can be spread throughout the year to ease the pain. By automatically moving your money to your different accounts at the start of the month, you will never have to worry about missing payments again.
  5. Put it on the house - if you have personal loans, talk to your trusted mortgage broker about consolidating them onto your home loan. Bank mortgage rates are very low, and are likely to remain that way for a while. Not only will you streamline your monthly cash flow, you will save money too.

By clearing the decks of all your essential bills each month, you will know exactly what you have to spend on day-to-day living expenses, the small luxuries that make the daily grind less grinding, and the occasional mall-splurge on your plastic. 

A fear of the financial future is really just a fear of the unknown. By defining your budget and getting to grips with your cash flow, you will be able to look forward to a brighter and more prosperous year.

 

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation or needs before making any decisions based on this information.

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