Cash Flow Management
It is very difficult to manage your cash flow, but not impossible.
First you need to budget for your cash inflow (ie. salary, bonus, social security, pension, real estate income, etc.) and cash outflow (ie. rent, mortgage, real estate taxes, insurances - pretty much anything you spend a dollar on). The best the way to do this is to write, or type, it down. Grab a piece of paper and start listing all the money that you anticipate receiving on a monthly basis. Then, itemize all of your monthly expenses.
Usually, your cash inflow is fairly straightforward. You typically have a good idea as to what your salary is and you can base your bonus on last year's numbers. If you have a small business, it may be difficult to estimate your income, but you may also want to use last year's numbers as a guide and adjust up or down accordingly. Further, if you are receiving items, such as social security, a pension, or real estate income, these figures should be obtainable.
Cash outflow is more difficult to ascertain. Even the best-made budget is subject to emergencies, such as home repairs, medical expenses, car replacement, etc. – some expenses are simply unforeseen. Notwithstanding emergencies, do your best. List every expenses you can possible imagine. Then, start to calculate what you anticipate spending on that expense. You should review last year's credit card statement, your checkbook, and your most recently filed tax return. If you take cash out from an ATM, you should also look at your bank statements to see how much cash you withdraw on an annual basis.
To help you manage your cash flow, it is recommended that you use an online program or software program that categorizes your expenses – this way you can continually monitor whether you are spending too much. Generally, investors who consistently manage and review cash flow have a better chance of successfully reaching their financial goals than investors who spend blindly and hope for the best. Here, failing to plan is definitely planning to fail.
A crucial aspect of financial planning is cash flow. Our team of qualified and highly skilled New York financial planners can help you implement a well-constructed budget that is very specific to your cash flow needs.
Serving Long Island and New York City clients with offices in Melville, Long Island and Manhattan, New York. Contact us today.
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