Cash Flow Management along with Cash Reserve and Debt Management form the foundation of financial planning. If a person has all of these three areas in rock solid shape then all other planning becomes much easier to do.
What is Cash Flow Management? In a nutshell it is understanding how, where, and why you spend money. It is also knowing your various expenses and comparing them to your income.
To effectively manage your Cash Flow we need to get our hands into your spending data. We identify your core fixed expenses – savings (pay yourself first!), mortgage, rent, property taxes, insurance, utilities, etc. to give us an idea of their cost. Next we identify the variable monthly costs such as groceries, eating out, child related, entertainment, etc.
Understanding and classifying these expenses gives us a framework from which we can make changes. Managing your Cash Flow may be perhaps the most difficult thing to do in Financial Planning but it is also by far the most rewarding. At Main Avenue Financial we have years of successful experience in helping people improve their Cash Flow Management skills.