Cash flow is one of the building blocks of a good financial plan. It’s also one of the areas most people struggle with at some stage, especially early on or when life becomes expensive – insert kids, education, sports, mortgages in this space!
Put simply, your cash flow is a function of how much income comes in to your bank account, less how much of that income is spent. If you spend less than you earn then you have positive cashflow. If you spend more than you earn you have negative cashflow.
Surprisingly , many people fall into the negative cashflow basket, or struggle to just make ends meet. Sometimes this is simply a result of not having a sound spending structure in place which can lead to impulse purchases and spending money on things that aren’t important.
An uncomplicated structure to prevent the cashflow trap is to “save before you spend”. It’s deciding to put away a portion of your income towards saving, investing or increased mortgage payments before anything else. What’s left is yours to spend.
It’s amazing what a difference this small adjustment to routine and mindset can make to a person’s financial position over the long term.
To discuss your savings habits, give the team at Steve May Financial Services a call and start a conversation today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
