Cash Flow: 4 Thoughts to keep your head above water

Understanding the dynamics and definition of cash flow need not be a hard, or even extremely detailed proposition. By its most basic definition, cash flow is defined as the difference between your income, minus your expenses. What you have left is your “cash flow.” Many people opt for professional advice on cash flow management, while others choose to manage it themselves.

People that budget their money typically do so on a monthly basis. Simply look at the gross amount of your paycheck. Pay attention to what is backed out for taxes and the like. The balance is your net income. Pay all of your bills, including rent, car payments, phone, cable, etc. What you have left in your bank account is the “cash flow” for that month.

Below are some simple rules to improve your cash flow, and eliminate pesky monthly expenses:

  • 1) Stop going out for coffee. Yes- you are guilty of this. Make your coffee at home and literally save upwards of $3 per day. Multiply that by a thirty day month, and you have saved north of $90 that month. That can make a big difference to your bottom line.
  • 2) Actually establish a budget and stick to it. Make a list of your income, and make a list of your expenses. Trust me, you will rest easier when you know exactly where your money is going every single month.
  • 3) Eliminate non-essential expenses: you can take this many different ways. Perhaps eliminating your cable TV subscription because you are constantly watching TV is a good starting place. Perhaps eliminating, or grossly dialing back the all-nighter with your closest friends is another. Either will save you money, and in some cases, put meaningful dollars in your pocket.
  • 4) The fourth and final idea is to establish some type of “side hustle.” Pickup an odd job or two on the side. Write for a blog, contribute to a website, do odds and ends and odd jobs for people in community. Exchange your time for dollars, and put that extra money in your pocket this week.

While these are by no means the end all by all in the cash flow conversation, this is a good place to start. You are encouraged to do your own research, your own reading, your own due diligence, and learn how to make your cash flow situation improve, and work for you. Today’s economy is ripe and wide open for the opportunist to get a toehold, build a following, and drastically add to the amount of cash in their pocket.

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