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By Tabi Cooper, CFP®

We host many “Financial Fundamentals” meetings with children and grandchildren of our clients, as well as volunteering with other groups in the community.  The opportunity to educate and be a resource to the rising generation is an honor and a responsibility we are grateful to have.  We’ve noticed that the most impactful topic throughout these conversations is often the discussion we have about cash flow, which is a much more enjoyable way to talk about budgeting!

Building a healthy budget is a proactive approach and allows you to decide where your dollars go each month.  The opposite of this – wondering where your dollars went – is far less pleasant in the long run.

Cash flow includes:

• Income – What do you have flowing in?
• Expenses – What do you have flowing out?

As we review cash flow with our clients and their loved ones, we find ways to be more efficient with spending and saving excess monthly income to reach financial goals. Analyzing cash flow throughout the year and implementing improvements leads to less stress and reaching goals more quickly.  A lot of the goals we set are for fun things – a family trip, a new vehicle, home renovation, or the dream family vacation home.

There are many tools and resources available to help track cash flow and organize budgets.  Forecasting and tracking expenses is extremely helpful, especially for annual and quarterly expenses.  A notebook, simple spreadsheet, or an app are all great tools, because the best system is the one that you will actually use.

In Scott Galloway’s book, The Algebra of Wealth, he spends an entire chapter on the concept of time.  It takes time to track your cash flow, it takes time to budget, and it takes time to be diligent with the dollars you spend now and the dollars you save for the future.  He explains that first you must measure and then you must manage.  This is true with any goal we are trying to reach in our lives!  Galloway also shares stories of how he makes cash flow management and saving fun – using a combination of accountability with peers and gamification.  Gamification is strategically enhancing a system by making it fun, resulting in increased engagement and motivation.

If you’d like to discuss cash flow and budgeting further, our team is here to help!  We truly value the opportunity to educate and encourage others.

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