3 tips for better cash flow management

When looking at your finances, it is important to understand where you are spending your money. However, for many of us it can be the most challenging part.

Many Australians struggle to save. Understanding where your money is going is critical to turning that around. However, budgeting doesn’t need to be a chore and there are some simple steps you can follow to take control of your finances and to start putting away more of your cash.

1. Build a monthly plan

Start by creating a plan – this involves documenting the money you have coming in, and what expenses you have to allow for each month.

Once you have an increased level of transparency around your money, you can then set yourself a budget and start allocating money to the key areas in your life. I like to set up automatic transfers so that I don’t have to think about this each month. For example, strip out your core expenses – rent/mortgage, food, utilities etc – so that this money is in an account you can’t touch. Then allocate money for savings and transfer it into a separate account. Whatever is left is the money you can spend each month on everything else i.e. going out, entertainment, etc. I like to call this money my ‘fun money’.

How much you allocate to each area of your life is dependent on your personal situation. There are many different models and formulas you can use, or a good financial adviser can help you tailor a budget to suit your goals and objectives. There are also a number of budgeting apps available, like the app included in our BeApt offering, that can help you visualise your budget and stay on track with alerts set around your spending.

2. Set priorities

In building your budget, you’re going to face some trade-offs. I recommend that you create a budget that allows you to enjoy your life whilst limiting some expenses, as this is how you are going to achieve your goals. This requires you to prioritise your spending.

For example, look at where you’re spending your money in terms of going out. Brunch has become a huge part of our lives in Australia, and it’s become a meal where many Australians, particularly those in a capital city, spend plenty of cash. So, if you like your brunch as well as going out at night, you might need to prioritise one over the other. In my case, I prefer going to a dinner over brunch, so I’d rather have breakfast at home and prioritise heading out at night.

3. Be goal oriented

It’s something that you often hear in business: Goal setting. You need to take the same focus in your private life. By setting goals you give yourself an objective to aim for and a reminder of why you’re trying to achieve it.

There’s a saying that a goal without a plan is really just a wish and, in this case, it’s very true. Go back to your priorities; maybe it’s saving a deposit for your first home or for a big trip overseas, the key is to actually make it a priority and set yourself financial goals around it.

It’s also important to reward yourself: Factor into your plan a reward for when you hit a goal. Maybe it’s a fancy dinner or a gift for yourself; giving yourself a reward for hitting your goals will help you to remain focused.

Having trouble managing your cash flow? Contact Apt Wealth and we can discuss how you can build your plan to a better financial future.

General Advice Disclaimer

The information in this blog is provided by Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) and is of a general nature only. It may not be relevant to your personal needs, objectives or financial circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if the strategies and products are right for you.