Cash Flow Management:

Effective cash flow management is the most critical aspect of your financial life as it forms the foundation of everything from a basic savings plan, realising investment potential or a having a comfortable retirement. Whilst it forms the basis of everyday living and is in real terms quite basic, it is the most overlooked tool when financial planning is considered.

What is it?
Essentially cash flow is having the right money in the right place at the right time doing the right thing.  There is no generic quick fix as it needs to be tailored to suit every individual situation.

Why is it hard to set up?
Consider any financial institution and any dealing you have had with them, they are profit driven and sell the products they have to achieve this whether or not it suits you. Banks are achieving record profits whilst everyday Australians are in the highest debt ever and Mortgage delinquency is at an all time high.

Is it in the banks best interest to take time and show you some basic strategies to minimise debt faster and save potentially hundreds of thousands in interest? No.  For example, an offset account attached to a mortgage is designed to save interest and shorten the loan term, but what do the banks do? Give you a credit card to use on a daily basis – this fly’s in the face of the purpose of an offset account and is not cash flow management.

Most people look for the best interest rate when looking for a loan, however your loan is for the long term and the interest rates fluctuate over the term of your loan depending on who has the best rate at the time. The loan may be right for you now, but is it right for you 5, 10 or 15 years from now?

In reality it is the structure of the loan that is far more important than the rate. Having an efficient cash-flow structure in place will out-perform any cheap interest rate!

You should consider
If you were moving into an investment strategy without an effective cash flow how do you identify if you can maintain the investment when the market has a downturn irrespective of which asset class you are in. Can you afford to hold it? Can you afford to tip more money in? Will you have to borrow more? Will you be able to sleep at night?

Conversely, what if the strategy works? Where should I place that money? How much should I move? How will this affect my life 1 year from now or 10 years from now?

How  can we help you?
We can help you to identify where your cash is going and immediately bring to light what steps need be taken to move ahead.  It is very easy to leak money when you are trying to juggle too many accounts and debts.  Whether you are renting, purchasing or investing in property it is important in each situation as it will help you achieve your individual goals through structure.

Cash flow is like asking someone to diet, without discipline it simply does not work.

We help you to ‘set and forget’ your cash flow management strategy.  If you set it up properly the first time then it is easy to manage in the future and will eliminate stress, waisted time and will give you control that you may not thought possible.

Contact us today for a free no obligation initial appointment to see if your cash flow is helping or hindering you.

 Prepared by John Hehir Financial Advisers Australia (FAA)