“Cash is king” become a very popular saying for good reason but I would like to take it one step further and say “cash flow is king.”
Getting control of your cash flow is the most important building block to wealth. There are millions of people who earn a great deal of money who fail to build any real wealth. If you spend what you earn and can’t manage your cash flow it is almost impossible to build long term wealth. There are thousands of profitable businesses in Australia every year that go bankrupt for failing to manage their cash flow.
Why is managing cash flow so difficult?
We live in a consumer society where for the most part it is everyone else’s goal to get you to spend your money so they can be better off. Upselling is a skill taught in even the most basic job roles and the banking industry is keen to get you to spend, as they earn commission on every dollar spent. The bulk of their money isn’t earned from lending but on transaction fees: they want to make it so easy to spend, that you don’t think about it. Every time you pull out a credit card the banking system is making 2% of the purchase price. In the US these interchange fees totalled $30 billion in 2004. So everyone around you is keen to see your cash flow.
Getting control of your cash flow
Cash flow management is not taught at school but is generally passed down from our parents. However many parents can’t teach budgeting or good cash flow management so what hope do you have. Your best hope is to put a system in place to give you back control. You need to be in control of your own spending, so decisions you make are planned conscious decisions. The planning part comes down to having a budget. Once you are comfortable with your budget you then need to establish a cash flow management system to help you stick to it. A good cash flow management system will put you in full control by taking away the ability to spend money without thinking about it. A good cash flow management system will also automate many of the spending activities so that it is not tiresome to implement. It should also reward you along the way by identifying and highlighting your saving milestones.
Implementing a cash flow management system
At True Financial we know too well the importance of having a good cash flow management system in place. We have worked tirelessly on developing cash flow management systems that work for our clients so that our clients can achieve what is important to them. We can help you by working with you to establish a simple cash flow management system that works for you. If you would like an obligation free appointment to see how we might help you get control of your cash flow please click here.