tl;dr; The starting point for almost all wealth management is setting a proper budget and understanding your cash flow.
Cash flow optimization is not just for businesses. Everyone has money coming in, money going out, and certain obligations they need to account for. The process of understanding that flow in order to maximize your income and minimize your expenses is cash flow management. It's about ensuring that you have enough money to cover your essential expenses, meet your financial goals, and have a little something left over to go out and live your best life.
While it does take a bit of work, having a good understanding of and control over your cash flow has numerous benefits:
- Reduce your financial stress. When you have a good understanding of your budget, you can feel more confident about your financial situation - and if things aren’t going well you can at least start on a path towards fixing them.
- Become more financially stable. By optimizing your cash flow, you can build a financial cushion to cover unexpected expenses and weather financial storms.
- Achieve financial freedom. When you're not living paycheck to paycheck, and you truly understand and optimize your cash flow, you’re actively working towards achieving your financial goals.
That all sounds great, right? But how do you actually make it happen? Roll up your sleeves and get to work on the following steps:
- Track your income and expenses. This means tracking your income and expenses for at least a month—but ideally over several months to identify trends and norms in your spending. At Range, our budgeting tool averages your spend in categories over the previous three months.
- Identify areas to cut back. Once you have a good understanding of your spending habits, you can think about reducing some of your spending in categories where you feel like there’s room (i.e. dining out, endless Amazon orders, etc.).
- Increase your income. Enter the side hustle. New streams of income definitely improve your cash flow, if unlocking these is an option for you. This could also involve getting a raise at your current job, or investing in income-producing assets (i.e. real estate).
- Automate your finances. One of the best ways to stay on track with your financial goals is to automate your finances. This means setting up automatic transfers from your checking account to your savings account, investment accounts, and other bills.
- Review your finances regularly. This is not set it and forget it. Your financial situation is fluid, so staying on top if it is important. How are you tracking toward your goals, are there additional areas where you can reallocate dollars towards your saving, etc.
Why manage your cash flow with Range?
We’re glad you asked. There are plenty of free budgeting tools out there - and many of them are extremely useful. And lots of people use spreadsheets to manage and track their finances. The benefit of the Range platform is the combination of two capabilities:
- Real-time updates on your cash flow and budget. Our tool is linked to all of your accounts and can give you real time information on how you’re tracking.
- Financial Advisor evaluation and recommendation. As part of your Range membership, our team of Certified Financial Planners will work with you on your budget AND based on that how to evaluate your cash flow to make sure the right amount of dollars are allocated in the right places (savings, investing, debt payments, etc).
Your budget and cash flow are the building blocks of your entire financial plan. Getting this right gives you a clear picture of your situation and path toward achieving your goals. Let’s get to work!
Manage your cash flow with Range.
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