Cash flow management is based on one fundamental principle: it is better to have more income coming in than there are expenses going out.

Cashflow management starts with tracking how much money is coming in and how much is going out. This process works together with goals-based budgeting to give you a comprehensive view of what’s happening with your money.

Cash flow management and budgeting tend to go hand in hand. However, “cashflow” is almost a more helpful way of thinking about your money. You need to divert the streams of cash towards the right things in order to achieve what you want to achieve. This might mean moving money from one area to another.

You also need to make sure the river of cash doesn’t run dry, i.e. you’re pumping more money out of the river than you are putting in. A positive cashflow position means you have choices and can make progress towards long-term goals, rather than living week-to-week.

By creating a budget tailored to your financial circumstances, you’ll be able to start taking tangible steps towards achieving your short, medium and long-term financial goals.

Traditional budgets don’t work for everyone. However, having some kind of structure for where your income is directed is super important to be able to plan ahead. This is true even for our high-income clients. In fact, it can be even more important for those with a high income as it’s so much easier for them to spend a lot of money in the here and now. You will struggle to grow your wealth if you’re operating out of a budget deficit.

We like to think of budgeting as goals-based. You have your day to day expenses, and budgets are useful to make sure you’re not ‘overspending’ in those areas. But ultimately, your budget should help you direct money towards longer-term, bigger goals. 

This might look like:

• Pay off outstanding debts
• Start building emergency savings
• Buy your own home
• Pay off a mortgage quicker
• Build a share portfolio you can live off

Whatever your feelings towards budgeting, we can help you create a system that works for you.

Read more about how to make an effective budget.