Each month you are moving either toward or away from your money goals. I like to think of each month as one step on a long journey to reach your financial goals. Once again, growing money is like most other things in life; the path is rarely straight. Some months you may race ahead, and other months, you may take a few steps back. Sometimes these cycles last even longer.
A simple monthly cash flow statement will easily show your direction for any given month; you can see what actions you need to take to improve your journey. This statement will help you to think of your own household as a little business and help everyone to focus on the financial well-being of that business. Think of yourself as CEO of that family business; your job is to make sure that the company not only operates at a profit, but also grows capital.
Capital is the savings that you accumulate to invest that will compound and grow. The mission of your company is to reach your financial goals, which will allow you to get what you really want in life; this is what I like to call your money reasons.
Your family cash flow is simply your profit and loss showing money coming in and money going out each month. This should be done using total numbers that include everyone who contributes income and incurs expenses for your household. I use the word family loosely here, because this may include you, your husband and five children, you and an elderly parent who lives with you, or you as a single person (who may have furry family members that have expenses but which probably don’t contribute to income, unless you have a dog that you breed).
Know what you want, and keep your eye on that goal to get through those slower times. The goal is what keeps you in action mode to move forward and improve your money journey. When the good times are rolling, put aside as much as you can to grow so that you can maintain your lifestyle during those unexpected leaner times.
By tracking your monthly cash flow during all cycles, you will be driven to earn and spend wisely and consciously on a daily basis. This is one of the steps I’ll be walking participants through in my upcoming Create a Roadmap to Financial Success course. If you need a little prodding to establish a routine to monitor your monthly cash flow, and the idea of a fill-in-the-blank template sounds like just the thing you need, check out the course. This simple but important step will immediately up level your financial journey.