Make great cash flow your lifestyle choice

Do you plan your cash flow — your spending — to support your wealth creation? With the holidays coming, this is doubly important. All those unexpected purchases and entertainment expenses: are they part of a cash flow plan? Or will you begin the coming year already in the red?

Cash flow is your biggest priority when it comes to creating wealth. Without a cash flow plan, you are going to struggle. A financial plan is where your goals are carefully laid out. But a cash flow plan will help manage your spending to achieve those goals, rather than leaving you wondering where all your money went.

It’s too common for people to face the end of the month with too many days left and not enough money to cover expenses. What happened?

They think they’re planning their finances, but when they honestly look at their cash flow, there’s money not accounted for. Hidden spending is the biggest threat to prosperity. We live in a mostly cashless society, where it’s very easy to overspend.

We used to keep physical money in our wallet. Budgeting could be as simple as checking how much was left as the week progressed. Today, impulse spending is just a click on your phone, or a tap at the cash register; and your money is gone. Often, your memory of how you so easily spent it also vanishes.

You need to keep control. You can lavishly treat yourself to those nice coffees, take-out food and other fun, but then there might not be any money left for more important goals. Without a cash flow plan, you don’t have a clear idea of what you are spending with all those clicks and taps.

Break down your expenses, by week, into three categories: the fixed costs, which don’t vary from month to month; the active expenses over which you have some choice, like food and entertainment; and what can be left over with a little financial discipline. Develop a cash flow plan, and then stick to it.

Need some help? Ask your Financial Advisor how to plan your cash flow so that you always have excess money available, year over year.