Tuesday, November 28, 2017
9 Tips for Maintaining a Positive Cash Flow
I have met many people that just can’t seem to spend less than they make. At best, they can just barely get by, living for the next paycheque. I’ve been there, and I must admit, it is a crappy feeling. That moment of realization when you say to yourself, “I’m broke,” is a frightening place. Transitioning from knowing something has to change to make it a reality is not easy. Just like working out, the first stage is the worst. You have the regrets, the fatigue, the doubt, and the dreaded “what ifs.” What if I just go out this one time? What if I just buy this one pair of jeans? What if I spend this one weekend in Toronto? “I work hard, I deserve it right?” Wrong, you don’t. It’s harsh and cruel, but it’s reality. If you are living paycheque to paycheque than you don’t deserve it. Ouch, what a jerk! Sorry, but it is true.
What you do deserve is to have some savings. What you do deserve is live comfortably in retirement. What you do deserve is to have a positive cash flow. How you go about doing it might be where you are confused. In today’s post, I will give my 9 tips on maintaining a positive cash flow. Remember that making more than you spend is the base of any solid financial plan, so let’s get started.
1) Write everything down
Now, this might sound like a lot of work, but if you are running negatives every month it is the best way to know where your money is going. Experts agree that writing down where you spend your money and where you should be spending it is a great way to realize your bad spending habits. Even I still do it until this day. At the end of every month I write down what I have is disposable income and what I need to spend it on. Everything left over is my slush money that I can spend on myself. If you want a good quality of life, you need slush money. Make sure within your fixed bills are is some savings for your future. Writing it down is the best way to start.
Aligning Your Cash Flow – Gail Vaz-Oxlade – Making Money Make Sense
2) Use technology
There are so many personal budgeting apps it is almost stupidity if you can’t get yourself straight. Right on your phone, you can have a personal money manager that will literally tell you not to spend any more money because you are in danger of going over budget. Back in the day, the warning for you came when your card was declined in the checkout line or at the restaurant. Awkward!!! Apps like Wally, Unsplurge, and Mint have taken all the guesswork out of budgeting. They make sure you maintain a positive cash flow and you can even link your bank account to the apps. There really are no excuses anymore.
My Favorite Budgeting App – Mint
3) Use cash
Remember cash? You know, that stuff your grandma puts in a card for you at Christmas? Call me old school, but I love cash! Why do I love cash? Because when the money is gone, it’s time to go home. It is the ultimate barometer of how broke you are. If you have a problem with using your debit or credit card, put yourself on a cash diet. Allocate a specific amount for each thing you need to buy weekly and don’t go over. If you have to, lock up the debit and credit cards. It’s the best way to cure your swiping ways.
4) Avoid hot spots
You know where I hate? The damn mall! Why do I hate it? Because you cannot go it to the mall and not spend money, large amounts of money. My solution: I don’t go to the mall! Go over your bank statement. You can see it in your online banking. Write down any unnecessary transactions. You will probably notice that many of them come from the same place. Routine is brutal eh? Your task is to not go to those places anymore, or at least limit the times you go. It is amazing how much money you give to Tim Horton’s or your local deli every month. If you can’t run a positive cash flow, cut those places out.
5) Avoid bad influences
We all have that friend that is just a fireball of bad decisions. We love them, we adore them, but they crush our wallet. It is important to understand that people can hurt your wallet as much as things, sometimes even more. This includes your children so stop spoiling them! If every Friday night is bottle night at the local nightclub, you have to cut that out. Positive cash flow is more important than good times because it is positive cash flow that leads to more future good times.
10 Types of Friends Who Are Costing You Money – Wise Bread
6) Save a little for the end of the week
I remember when I was having a hard time with money and I started to turn things around. One of the things I did was remedy being broke before my next paycheque by hiding a little money for emergencies. I would stash 50 bucks in case I ran out before payday came. After doing this for a while I started not needing that money. I still put the 50 aside but over time that grew to become my mini emergency fund. If you can’t make it to next payday, stash a little aside right when you get paid, so it can be your emergency money. There is nothing worse than being broke and needing food.
7) Plan and use a list
They say never go to the grocery store hungry. I agree but you should also never go without a list. That goes for anywhere you go that costs you money. Not bringing a list means you will wing it and end up buying more than you intended for. Chances are most of the stuff you donate on Christmas food drives is the stuff you bought when you were hungry. It takes a few seconds to write out a list and it could save you hundreds of dollars. Remember that grocery stores and Wal-Mart are death traps where they want you to overspend. Fight the power!
8) Learn to have fun without money
Going back to point 5, you need to learn to have fun without money. I used to have to have 5 beers, for any time to be worthwhile. Now a nice cup of coffee or one beer will do. It is imperative that you find things to enjoy that don’t cost any money. Just to simply exist you must spend money. If you go out of your way to spend even more money at every turn you will find yourself in the negative every month. It is part of growing up, so make sure you instill this in your children as well or they will struggle with it later in life.
10 Wealth Killers – Budget Boss
9) Share your goals with the ones you love
An easy way to avoid spending more money than you should is by sharing your goals of thrift with your family and friends. Going “ghost” will often make people upset with you. You can avoid that by letting people around you know that you are going to be saving money for the next while and they should hop on board. Most of your loved ones will understand and be proud of you. If there is anyone who isn’t then that’s the breaks. What you are trying to accomplish with a positive cash flow is far more important than a good time.
Running a positive cash flow every month is very simple once you get going. It becomes a habit, but it takes a few months of teeth gritting to get there. Small things in this area really add up, so take the few points that pertain to you and run with them. Remember that if the goal is to have more money, spending less money is the easiest way to do that. It is the one thing that you can completely control.
Thanks for tuning in today as Cash Flow Week continues at Budget Boss. Don’t forget to tune in tomorrow as we discuss the Latte Effect. If you want to start your own budget, please don’t hesitate to message me at joe@budgetboss.ca. Have a great day friends!
“The fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality.” – Chris Chocola
Email – joe@budgetboss.ca
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