facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast blog search brokercheck brokercheck
%POST_TITLE% Thumbnail

4 Tips to Increase Your Family Cash Flow

You've all heard the expression "cash is king". Cash flow is what is left over (or owed) when you take your income and subtract expenses. Not at all complicated, all too often families live beyond their means with more money going out on a monthly basis than they have coming in. If continued long enough, this will eventually lead to serious consequences for your future. In managing your personal economy, it's important to NOT apply the model our federal government is providing. For a humorous, but thought provoking look at this topic, enjoy this  YouTube video: What if the government debt applied to a family?

By ensuring a positive monthly cash flow, you can tackle debt, stop living paycheck to paycheck, be ready for emergencies, and save for future purchases and goals. To help increase your family's cash flow try following the four tips below.

1. Create a Solid Budget

One of the most powerful tools to understand and controlling spending is a budget. But  it is important to budget effectively. You should get as detailed as possible in a budget, avoiding making too broad of categories or not including enough. A very common mistake is to neglect to focus on those items that do not occur monthly. For example, the holiday season comes every year at a predictable time with a predictable cost. It should not be a surprise in your budget and require credit cards to get through it. Start with a preliminary list of expenses that are recurring every month. Those should be easy to track and list. Then focus on those one-time or "lumpy spends" that can, and often do, blow a budget. This might include items such as gifts, repairs and maintenance, clothing, car taxes, oil deliveries, vacations, and holiday spending. Add up all those expenses and divide by 12. Save that amount each month to cover these expenses. Do not just assume "I'll deal with it when it happens"

Once you have created your budget, carefully record every penny you spend. After a few months, you will be left with a much more realistic view of where your dollars are going and what categories you might benefit cutting back on.

2. Reduce Your Monthly Costs

Monthly expenses can grow over time, becoming large drains on cash flow that can be difficult to keep up with. Take a close look at all your bills and consider ways in which you can reduce these costs and what expenses you can do without. Look at cable and phone bills and see if you can reduce costs by "cutting the cord" or contacting your company to see if there are any promotional packages or cheaper options. If your utility bills are a large part of your expense, find ways to save energy around your home such as installing a programmable thermostat and using LED light bulbs for your lighting. Costs of auto fuel can be reduced by combining chores, carpooling or utilizing public transportation. Buy groceries (that you truly need) in higher quantities when on sale and use coupons. Bring your own lunch and coffee to work. Try to negotiate everything you can when you buy. Reduce eating out and enjoy the challenge of learning to cook restaurant quality meals at home. Go on a "staycation" and learn about your local area.

Seemingly little things add up to big amounts.

3. Consider Downsizing

You might also have gone though some life changes-- maybe you have become empty nesters, hobbies have gone by the wayside but the toys are still around, or you regret buying that brand new sports car, or you just have a lot of clutter around that is collecting dust. If your bills significantly exceed your income and you feel like you are continually playing catch-up to make ends meet, your best option might be to consider downsizing your life. For a major change in your financial position, you might downsize some of your larger expenses such as your home, your vehicle, an RV/ATV/snowmobile or boat. To make minor changes, you can consider ridding yourself of unused items by selling them and using the cash to help pay down debt and reduce your monthly bills.

4. Find Ways to Increase Your Income

If you have made attempts to clean up your budget and reduce your monthly costs and still find yourself coming up short every month, it might be time to consider ways in which you can increase your income to cover the expenses and end up with some cash at the end of each month. You can consider taking on a part time job, inquire if you can get more hours at work (this can be the most effective method if you can get overtime at time and a half!). You can also  use your time and talent to start your own business and bring in extra money as a side hustle.

The extra work doesn't have to be forever....once you eliminate the debt and interest payments and control your monthly cash flow, you can back off on the extra job if you want.