This week’s Personal Investment Tip is about cash flow; Cash flow is definitely queen! The reason I say this is because it’s difficult to increase your investment money each month if you are not cash flowing, unless you have been blessed with a one-time inheritance, bonus, or large capital gain from some type of investment. Even if you have had such a fortunate financial event, you still probably want to focus on adding investment capital on a regular basis so you can really compound your wealth.
Cash flow calculation is simple; it’s just the amount of money coming in less the amount of money going out in a given month. If there is more coming in than going out, you are said to be “cash flowing”, and if there is more going out you aren’t. When there is more coming in than going out, it’s easy to fall into not spending wisely and consciously. I suggest having a one line item in your monthly expenses, or money “going out” column, for an amount that goes straight to your investment savings account. Make the amount large enough to both challenge and excite you. This is how wealth is accumulated beyond those one off financial boosts, such as bonuses, inheritances, and occasional large capital gains on an investment.
This week I have been finalizing the content for my upcoming financial course on simple steps to move from confusion to clarity about your finances. One of the steps we’ll go through is cash flow management. Financial women know that positive cash flow is queen and key to growing wealth.