Cash flow is the amount of money that moves into and out of your bank account. Cash flow is important since it determines where your money is being spent and how much you have available to spend on various goods and services. Managing your cash flow requires making a budget and tracking changes to that budget. In addition to this, managing your cash flow may require you to make cuts in your expenditures.
Things You'll Need
- Budgeting software
Gather all of your income and expenses.
Add up your income and expenses and input them into your budgeting software. You may also use a simple accounting spreadsheet if you wish.
Increase deductibles on all insurance policies you do not think you'll make a claim on very often. This lowers the premium for the policy and increases your cash flow.
Reduce any investment fees you're incurring from your investment broker by switching to an online banking and brokerage firm.
Allocate more resources to productive endeavors. For example, consider reducing expenses associated with loan payments by paying off loans and credit cards. Then, take the monthly payment that was going to the credit cards and loans and invest it.
Buy fewer but higher quality goods and services. Higher quality goods may need to be replaced less often, thus increasing your long-term cash flow since you won't be constantly replacing cheaper items with inflated dollars. Higher quality services may also result in a reduced need to purchase additional similar services in the future.