The best place to start is by creating a cash-flow strategy. This will not only highlight where your hard earned money is actually going, but it will also help you to prioritize the things that are important to you. Effectively helping you to create a much more accurate plan that will ensure that you are able to manage your cash flow with greater rewards.
The goal is to spend less than you make and invest the left over money towards your future. If you’re living paycheque to paycheque then there is always room for improvement. If this is you, don’t get disheartened;
The Australian Bureau of Statistics reports “total household debt stood at $1.84 trillion at the end of 2013, equivalent to $79,000 for every person living in Australia at that time”. This is the highest level of debt we’ve seen in the past 25 years!
Household income is an important factor to take into consideration when deciding on your ability to make loan repayments in a timely manner. Australian National Accounts show that the value of household debt was almost 1.8 times the amount of gross disposable income received by households in 2013. In other words, we owe more than we make!
In general, the nation is clearly struggling with cash-flow.
So, the first thing you need to do, is work out your income and expenses, and the easiest way to do this is by using a tool that not only enables you to track this information, but that allows you to have the information at your fingertips whenever you need it. We recommend several different methods to our clients depending on their own individual needs and requirements.
Whilst each is different, they are all very easy to use and provide accurate Cash flow forecasts, which also helps predict upcoming cash surpluses or shortages, so that our clients can make the right decisions when it comes to spending their money.
Such tools also help with tax preparation (it’s always nice to know you are getting every penny back from the government that you are entitled to), planning new big ticket purchases, or identifying if you will need help from an external source.
It’s important that you refer to and update your information regularly because the economy, legislation, and other things that are beyond your control change as often as the weather. Just because you were on the right track six months ago, doesn’t necessarily mean that your planning is still on target.
Work out your regular expense and your cash flow position. If you find yourself in a negative cash flow, don’t despair. The fact that you’re reading this means that you’re being proactive and looking to do something about your future. That’s the first step! So give yourself a pat on the back for taking this important step (most Australians won’t do it). But now it’s time to get to work.