Take control of your personal cash flow
How do you manage your money? If you’re like the majority of us, the answer is probably that your income goes into one account and is spent from that same account. You draw out money as you please, without much thought into a long-term savings strategy.
Cash flow is a term usually associated with businesses, but it should also be considered by individuals as well. Usually, money comes into one bank account and is spent. We’re a nation who have the attitude of spending first, then saving what, if any, is remaining. This approach means we have little, or no, cash saved away for a rainy day. It’s causing us to struggle to achieve some of our lifestyle goals such as purchasing a first home or enjoying regular overseas trips. Many of us resort to borrowing money in the form of credit cards and personal loans to pay for their lifestyle expenditure. It’s much easier to control your spending than it is to control your income.
No one likes to do a budget and limiting yourself to the amount of money you have access to spend is not a fun concept. But there’s huge advantages to having better control over your personal cash flow and knowing your financial situation month to month. And once you’re in the habit of splitting your income, it becomes routine and you build your spending habits around your available funds.
Money should be allocated between lifestyle expenditure, home loan repayments and an investment strategy. A financial planner will help you decide where money should be spent.
A financial planner will advise you on how to seutup your accounts to make managing your cash flow a straightforward and automatic process. Different accounts would be used for different purposes. Below, we’ve highlighted an example of the way your accounts could be organised.
- Offset account – Are you maximising the benefits of offset accounts?
- Lifestyle account – Are you saving a sufficient amount for big ticket items like a new car?
- Bills account – Do you have enough money available to pay your day to day bills?
- Tax savings account – Have you saved enough money to pay your next tax bill if you are self employed?
If you feel like you’re not in control of your personal cash flow, it’s time to speak with one of our financial planners. They’ll work with you to devise a plan that works with your lifestyle whilst also building a long term strategy to accumulate wealth.
Andreas Kettemann is an authorised representative of Synchron (ABN: 33 007 207 650), AFS Licence No. 243313. All invoicing for the financial planning services will be done through Synchron as the dealer group.