What are you doing with your money?
Cashflow Management
Are you saving, investing or it’s "you only live once" spending vibes?
The basic advice anyone would give you is to develop a saving culture, and always put money aside for a rainy day. Better still, invest and not just save. Investing your money is vital to growing it (creating wealth).
How you handle your money is the focus of this piece and it's called cashflow management. Cashflow management is the way you manage the flow of cash (LOL).
Businesses manage their cashflow to avoid insolvency issues, so why not you on a personal level (at least it will help you not go broke). Managing your cash flow would simply mean optimizing your cashflow for better outcomes. To do this you need to answer the following questions; where is my money coming from? What are my income streams? How often is money coming in? On the other hand, where is my money going? What are my spending habits? Do I spend on luxuries or necessities?
Answering these questions in detail is fundamental to effectively managing your cashflow.
How best to optimize your cashflow
After drawing a big picture of your cash flow by identifying sources and destinations and answering the questions above. Your next big step would be budgeting. Looking at what you earn against what you spend and what you own against what you owe, you would be able to efficiently draft out a solid financial plan or budget for yourself.
Thinking just like a business, consider whether you want to cut expenses or increase income, whether you should have more income-generating assets or reduce liabilities, whether you should save more or spend less. A good personal cashflow system helps you with your financial management, reducing the risks of piling up debts, and is the first step to reducing your debt burden (if you have) and building your finances.
P.S: We would advise that to truly optimize your cashflow you speak to a registered financial planner.