Over the next couple of weeks I'll be sharing a series of blog posts written by Kevin Parton (a Certified Financial Planner) with Investors Group in Vancouver. The posts focus on really breaking down and hacking your money to make the most of it for the short and long term. Whether your plan is to save for a downpayment, vacation or savings, knowing where your money is a key factor.
First Step: Tracking your Money!
Some people say managing spending is as simple as spending less than you make. But cash flow management is about more than simple math.
Like financial planning, one of the main goals of cash flow management is to achieve specific savings goals. As well, one of the main purposes of such planning is to determine whether you can change any current spending behaviours to achieve the lifestyle you want in the future.
3 reasons cash flow management is right for you
1. Tracking cash flow works for everyone
Whatever income bracket you fall into, tracking cash flow can help you better manage your debt and spending. Often, even advisors who are helping clients through the process commit to their own cash flow management plans. That way, they can answer clients’ questions and understand people’s challenges throughout the process.
2. You can end bad habits
Without changes in spending behaviour, a budget does little good. The same goes for tracking spending, since that only involves recording history over the long-term.
Done properly, cash flow management involves subtly but effectively altering counterproductive spending habits.
3. You want to do more than erase debt
For most people, debt consolidation means aiming for lower monthly payments and expenses. The downside is that many debt consolidation schemes can actually cost more over the long-term.
You commit to setting specific spending and savings goals, and through managing your cash flow, we can look at:
- Why you want to become debt-free;
- How we can best achieve that over the short and long term;
- How that will affect your goals.
As you can see, the process involves more than looking at the total amount of your monthly payments and expenses.
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