Financial success – getting started

It is obvious to some but not others … a properly managed cash flow is the key to financial success.

Strong cash flow management means using a system and allowing the system to do the work – not trying to “cut back” and feeling compromised or miserable.

The system is the key to making it easy and making it all work.

What works

Your household budget might have some “slippage” and benefit from fine-tuning or it could be “broken”. Either way, best to start with a simple but well structured spending plan.

A savings plan comes next and is the seed that you plant to help grow your first (next?) $1 million. Look, you are unlikely to be able to save enough money to achieve all your goals.

Don’t worry, once you know how to invest you might be able to see that you will be OK … you can have enough money for everything.

TIP: $750,000 in a super scheme and a mortgage free home is unlikely to be enough. Anyway, a good start to setting up a solid savings plan is to initially divide savings (surplus cash flow every week, fortnight or month) between

Temporary savings – less than 5 years
Permanent savings – 5 years or longer

OK – spending plan underway. Savings plan underway. Then, let’s allocate cash flow across life’s stages in the future. Yes we’re thinking beyond saving for your next holiday or car update – they will be in the plan too though.

Let’s also think what we will need big picture long term and allocate our cash flow accordingly … short term, medium term and long term.

From good to great

A savings plan will be beneficial however, best to start with a spending plan.

A good spending plan will systemise expenses. That way it is simple for you. It means we get the job underway and sorted.

A great spending plan will separate and categorize the three different types of expenses. That gives you control (taking the control away from the monthly bills).