Cash Flow Tips
Cash Flow
It’s one of those terms we hear frequently associated with businesses and other entities, but it’s key for our own money, too. All we’re talking about is how money comes in and how it goes out.
Yes, budgeting is important. Yes, tracking your spending month-to-month and week-to-week is vital for improving your financial life. But if you don’t understand how and when money comes into your spending account and then goes out, you won’t get ahead.
The issue is that our paychecks and bills rarely line up. Some of us are paid monthly, others twice a month, others every other week, others weekly; some of us use services that allow us to get access to our wages the same day we earn them or even a handful of days early.
But rent or mortgage payments are typically monthly. Sometimes car payments are monthly, other times they’re tied to pay periods. My credit card due date may not change month-to-month, but the amount I owe might. Oh, and when things like my utility bill are on a 30-day billing cycle, occasionally I end up having to pay two utility bills in one month.
Add all of that together, and it’s a recipe for disaster. What if I’m not broke, it’s just that my bills hit at really bad times in my paycheck cycle? And how do I fix it?
Track It
Get a calendar or a spreadsheet or just a blank piece of paper and write down when you get paid, how much you get paid, your normal bills, and the balance currently in your checking account. Then do the math: if I have $25 in my account right now, I get paid $1,100 tomorrow, and my $1,500 rent is due the day after that, I have a problem!
Pay Attention to Due Dates
Some bills, like credit card payments and car payments, can be changed if you’re up-to-date and have a good reason. If having your car payment due the third week of the month would be helpful for you cash flow, call and ask!
Save Up for the Big Bills When you Can
Treating my rent or mortgage payment like a bill I save for every week may fix my cash flow: if I know that half of this week’s paycheck has to be saved for next month’s rent payment, then I won’t blow it eating out or spending on things I don’t need.
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