Most people don’t think about their income and spending in terms of personal cash flow. Managing and monitoring your own income, expenses and spending is just as important for personal financial management as it is in business. Cash flow planning can be considered the foundation that the rest of your financial planning is built on because it allows you to:
- Assess your ability to meet your goals.
- Project your future cash flow needs.
- Identify opportunities to increase income and/or decrease expenditures.
- Make portfolio adjustments to meet your investment objectives.
Having a positive cash flow means you can pay your bills on time, cover any other immediate expenses, and have available cash for emergencies and unexpected events. These actions will protect your budget and will give you time to proactively respond to any money problems before they hit your accounts, keeping your finances out of the red and keeping you relaxed.
Being aware of cash flow and taking the actions of forecasting your daily cash available and building a buffer fund to support your chequing account will help you significantly. These actions will protect your budget and will give you time to proactively respond to any money problems before they hit your accounts - keeping them out of the red and yourself relaxed.