5 Steps to a Better Cash Flow Plan

Here’s a true story: Cash flow planning is boring. 

It’s also messy business but important to building wealth and financial freedom.

How important? Let’s just say you could consider it the Jon Snow of your financial plan. 

Figuring out how much money is coming in and going out each month is the basis of cash flow planning but there is more to it.

Balancing needs and wants, prioritizing spending, creating guidelines, and deciding where and how to invest your funds are key components. 

Here are a few things we do to work toward an effective plan:

Map It Out

Creating a visual can be helpful. Try mapping out how much you make each month against how much you spend. Then take it further into how much you spend on stuff you need versus things you want. 

Do you have irregular income from busy season, commissions, or bonuses? It’s helpful to match those expected amounts in advance with plans to invest or use the money otherwise. 

Play the Percentages

Looking at the numbers on a percentage basis is always a helpful as a guide. 

What percentage of your income do you plan to invest? How much should you spend on housing expenses? What’s left over for the fun things we want to do? 

The right numbers look a little different for everyone, but there are helpful benchmarks to consider. 

Make Choices

Unfortunately, it’s probably true, most of us can’t have it all. At least all at once! But we can work toward everything we want over time. Breaking things down into the highest value items goes a long way.  

Automate It

I feel like I’ve said this before  - Automatic contributions are a powerful force. They eliminate a decision to make and remove an item from the to do list - both good things. They also force our spending plan to adjust to what’s available, and this, prioritizes what expenses we take on. 

It's still true! 

Adapt to Change

Change is the only constant we can count on. Family situations, careers, tax rules, legislative policy and many other things change frequently. It’s important to review and account for the changes along the way.