Cash Flow & Debt Management
A highly effective cash flow management system is the most foundational, yet often overlooked part of one’s financial life. Such a system ensures that spending is aligned with present-day priorities and future goals - all while using the least amount of mental space every month. This is not just developing a spending plan, but a plan for actually managing how cash is used to satisfy monthly needs, wants, and service debts. Burning through monthly cash flow without much thought is common but reckless. Developing a clearly defined budget system is required to have confidence in managing your money. Understanding important metrics such as debt to income ratios, debt to asset ratios, balance of net worth, and credit score evaluation is essential to successful cash flow and debt management.
This is different than simply having a budget or cutting spending; personal cash flow management is recognizing the relationship and timing between your hard-earned dollars, expenses, and savings. Understanding fixed and variable expenses help create parameters for how you want to spend your money. It's useful to spend time understanding if those fixed expenses conflict with other goals like saving or paying down debt. Automating your bill pay system has never been easier given today's technology. Automation will give you the peace of mind knowing that you’re taking care of your obligations on time every month. Identifying your spending methods is also useful exercise as it can help pinpoint potential problems. Whether you pay for your expenses with cash, on a credit card, or multiple credit cards can reveal valuable insights to your current cash flow management. We take the time necessary to identify a system that will work best for you and develop habits for success. We also can help you avoid making decisions that could have adverse financial consequences such as:
- Spending more than you make.
- Making an emotional purchase.
- Seeking financial advice from relatives.
- Not creating a budget.
- Buying a home you can't afford.
- Not planning sufficiently for retirement.
We offer our clients a robust cash flow management tool within our client portal. It begins with connecting all of your accounts, assets and liabilities so all transactions flow through one system. From there you can set up and adjust your monthly budget, track all income and outflow, and have our system automate transaction categories so the time you spend reconciling monthly is kept to a minimum. The result is an automated, powerful budgeting system which allows you to quickly identify and adjust your spending as needed.
Bottom line, even though creating a personal budget can be challenging, the benefits far outweigh the downside. From our experience, we find that those who adopt some form of a budgeting system – from elaborate to simple – are generally more financially confident than those who don't. We are here to help you create that confidence.