Cash flow is the movement of money in and out of your possession through income and expenditure. Understanding how your funds flow from income to expenses is the first step to using good cash flow management to build your wealth.
Cash-flow management is the process of monitoring, reviewing and regulating your cash flows. Cash-flow is the main indicator of financial health and good cash-flow management is essential for an individual or a business to survive and thrive. Positive cash flow is where you have more money coming in than going out, resulting in surplus income for savings and investments. Positive cash flow is essential to meet various obligations and ensures that you also have funds for times when you most need it. Negative cash flow is where your outflows are higher than your inflows in a given period. Positive cash flow is critical to creating wealth and ultimately achieving your financial objectives.
Budgeting is an integral part of cash-flow management and generally is the first exercise in drafting a cash flow management plan. Having an overview of how you use your money, and understanding your cash flow, will give you an insight into how you allocate your funds and how you might make changes to improve your budget. You can then use this information to find areas where your money is under-used or misused, which will likely open up opportunities or create more efficiencies with your finances.
Once you understand where your money comes from and where it goes, you can start to take control of this flow and consciously invest, receive returns from those investments and prudently manage your funds for long term wealth creation.
We work closely with our clients in the areas of efficient budgeting and cash-flow management.