There’s a common misconception that in order to manage your cash flow, you need to dramatically cut back on your lifestyle, create an extremely tight budget or meticulously count every cent.   It really doesn’t have to be that way, and it is possible to have long-term impacts with small, manageable changes.   

Benjamin Franklin said it best when he said – “Beware of little expenses; a small leak will sink a great ship”. 

National Australia Bank’s Financial Anxiety Survey for the March 2017 quarter revealed an alarmingly high number of people are worried about their financial situation, particularly women and low-income earners.  Four in 10 Australians conceded they are cash-strapped.  (source) 

Here are 5 easy tips you could try today, to be on the road to managing your cash flow in a more positive way: 

Take an honest look at your current situation  

Most people know how much they earn but a lot of people come unstuck in understanding and explaining how much they spend.   It’s easy to underestimate discretionary spending or forget a bill that only comes in infrequently.  The great news is, there are quite a few tools to help you understand your cash flow, so you can start to make changes.  One of the tools available from the Australian Government is a budget planner: www.moneysmart.gov.au.   This tool allows you to work out where your money is going, save your results and simplify your budget.   

Remove any costs that are not required  

Once you have reviewed your current situation, you might notice spending that you didn’t know existed or you would be happy to live without.  Common examples of this might be a gym membership you just don’t use (approx. $1,300 a year) or pay TV that you don’t have the time to watch (approx. $960 per year) 

Challenge yourself to reduce some discretionary spending by 50% 

Take the challenge to see if you can reduce some of your discretionary spending by 50%.  For example, dining out twice a week could cost approx. $6,240 per year.   Cut back to once a week and you could save approx. $3,120 per year.  Love going to the movies once a week? Try swapping to once a fortnight, a trip to the movies (and snacks!) can easily add up to approx. $2,600 per year and if you cut your trips by 50%, you could save approx. $1,300.00 per year.  

Get a better deal, more money in your pocket 

As a consumer, you have the ability to increase your cash flow by reducing your spend – this can be done by negotiating a better deal on those costs that are simply unavoidable.  Contact your bank, electricity supplier, internet provider and ask them for a better deal, you might be surprised by what they offer.  

Future earnings = future savings  

For many people, the more money they make – the more money they spend.   Think about how you can turn future earnings into future savings.   Do you get a yearly pay increase? A bonus, tax refund or other unexpected income.  Plan to put 80% to 100% of the extra amount directly into some type of savings account.   

Why would you do all this?  By managing your cashflow you will be able to put yourself in a better financial position and work towards goals that are important to you.  Alternatively, you could reduce your debts and feel more confident about your future.
 

Taking the time to visit a qualified financial planner can also put you on the right path to managing your cash flow.  I offer a 30-minute financial review session.  In this session, I can review your current financial situation.  I can see if I can help you achieve your financial goals and the best (and quickest) way to do so.  You can contact our office on 07 3102 4948 or book a time directly in my diary via the link below. 

If you would care to share your experience with me, please comment below!