You may spend a great deal of time considering what to invest in, when and even question whether to invest at all. Hours could be spent researching, talking to advisors and calculating the impact on your personal wealth – all these considerations are of significant importance but not at the cost of overlooking personal cash flow management.
Prioritise your lifestyle with personal cash flow management. Professional strategic advice can help to optimise income, such as salary and investment returns and outflow of expenditure to give you the lifestyle balance you want. Businesses often invest extensive resources into this field so why shouldn’t you apply the same vigilance to your own personal finances? For businesses and individuals alike, prudent cash flow management strategies are crucial when establishing realistic short-medium and long term financial goals.
Cash flows can either be,
Positive (Income > Expenditure)
Negative (Expenditure > Income)
Neutral (Expenditure = Income)
Maslow’s Hierarchy of Needs is one of the best known theories of human motivation, proposed by American psychologist, Abraham Maslow. The hierarchy is often displayed as a pyramid, with the most basic needs at the bottom and more complex needs at the peak.
If we were to look at Maslow’s Hierarchy, cash flow management is a basic need, fundamental to surviving and living. Well managed cash flows provide security, peace of mind and allow for a more optimal allocation of resources.
It is important to note that cash flow management is not just about controlling debt but a more comprehensive proposition and is a key determinant of when expenses can increase or when they should decrease. Individuals or advisors can construct the most fantastic of financial strategies for a med-long term goal but that plan would never come into fruition if the proper cash flow foundations are never established. It is very difficult to climb further up the hierarchy and have higher aspirations if you lack those basic building blocks.