Let’s Talk About Cash Flow, Pt. 2
Build Awareness & Pay Yourself First
Last week we began to discuss cash flow. We touched heavily on inflows and money coming in.
This week we will talk about the second part of cash flow—what’s going out. Some of these outflows are our necessary day-to-day living expenses, while others are based on our decisions.
At the end of the day, it’s on you to weigh those decisions and how they impact your goals and values.
Usually, these spending decisions are part of essential conversations we must have about budgeting. But, let’s take a different approach today. Instead of focusing on the word “budget” or the idea of one, let’s focus on the word “awareness”.
Being aware is a process of understanding where your money is going. It can also help you answer questions such as “is my money being directed towards my values?” and “is there a way for me to find more money to put towards my goals?”
Various apps or tools can help you be more aware by giving you a monthly snapshot of your cash flows. Apps like Mint.com, Nerd Wallet, Every Dollar, YNAB (You Need A Budget) can link your bank accounts, credit cards, and more. Better yet, they also separate your transactions by category.
Whether it’s via one of these apps, a tool through your bank account, a spreadsheet, or paper and pencil, we recommend that you establish a routine. The longer you track your outflows, the better you’ll get at building awareness too. You’ll have more insight to compare how your spending changed from one year to the next.
With all this said about being aware, the most important practice you can implement is paying yourself first. Paying yourself refers to holding yourself accountable and ensuring that you are funding the goals you have determined to work on first.
Understandably, we may not be able to fully fund all of our goals at once. So you have to make sure that you know your most important goals and what is acceptable with your current cash flow situation to put towards those goals. Once you do this, set up a system to automate the funding of those goals, preferably before your income ever reaches your spending or checking account.
We are ready to help you in any way, shape, or form to be aware and pay yourself.
Schedule an Intro Call if you have any questions or want to find out more.