Couple Money

Cash Flow: Optimizing Your Budget

tax refund money

We want to put the money to good use.

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We're working on reviewing our budget and cash flow tonight for our family's financial meeting.

With our new house expenses, we're adjusting everything to make our finances run smoothly.

Having a positive cash flow means our net worth will grow over time while having a negative cash flow will eventually drain us.

Why You Need to Manage Your Cash Flow

The first step is to get a financial snapshot of all of your accounts. It may take a little bit of time if you haven't done this before, but I want to you to know that it's worth the effort.

Seeing our cash flow and net worth gives us an idea of where we need to adjust. after getting idea of where we were starting we went ahead on creating a plan to improve our family's finances.

While cutting costs is a great way to increase your cash flow (more on that later), it's only one part of the equation. Frugality has its own limitations and that's why you also have consider the other side of the coin: building your income stream(s).

Increase Your income

While this is a harder step, it can also be the most rewarding. The idea is to look for ways within your life that you can build or expand your income streams.

While some people will be drawn to entrepreneurship, others may want to stay within the framework of their office position.

The key with building income is having a few streams, even if they are small, to help you.

Make sure though your income stream doesn't overwhelm you.

If necessary, simplify your finances, focus on 2 income streams and slowly build from there.

Some goals for the additional income can be:

Just make sure how you're spending your money is a reflection of your values.

Optimizing Your Expenses

Going back to the financial snapshot you took, try examining your expenses and ask yourself if this is money well spent.

If you have cable for example, do you use it enough to justify the price? Cut expenses that you don't really need and don't want.

If you do use a service like cable, have you called the company and tried to get a better deal?

If you’re looking at some ideas on where to start, check out these:

Simplifying your life can remove some unnecessary expenses and free up money for you to spend what you love.

Which Budget Software Can Help?

Besides using personal finance spreadsheets, there are numerous tools on the web and for your desktop that you can use to get your finances in order as a kind of budget planner.

Don't get hung up on the method, just implement what works best for you and your finances.

I'd love to hear from you! How do you manage your cash flow? What has been easy for your to implement? What has been hard?

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