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Saturday, February 13, 2016

Ways To Increase Your Cash Flow

"Never depend on single income. Make investment to create a second source." --Warren Buffet




Two things to remember in managing your cash flow. One is to earn additional income. It can be a direct selling or network marketing or multi-level marketing. Second is to manage your expenses.

Managing your expenses is like controlling the valve of your kitchen faucet. By doing so, you will be able to manage your cash outflow. 

Let discuss it one by one.



Managing Your Cash Flows

Cash Inflows. These include cash that comes from your salary, other income, loan proceeds, investments, business or proceeds of sale of your assets (e.g. car or house and lot).

Cash Outflows. These include cash that goes out of your pocket like your house rent, tuition fee, food, gasoline, payment for your car installment, credit card payment etc. In short, these are your expenses that you have to manage.

Is there a way to earn additional income to improve your cash flow? Yes there is! In fact, Forbes offers 44 Ways to Earn More Money.  All you have to do is find which one is doable and best for you.

In my case, I searched for a company who is into direct selling and multi-level marketing, a company who is known for its integrity. There are lots of network marketing company out there who offers good compensation plan, but they are not there to stay. If you choose the wrong company, your integrity would be at stake. In my search, I found Forever Living Products. It is a perfect choice because the company has local office in my area. No need to worry about product distribution and training.


Managing Your Expenses


Have you heard about the 70/30 rule? This is what I have learned from my mentors. 70/30 Rule means that your expenses should be within 70%  of your income. (Read more...)

It would be hard at first to implement the 70/30 rule specially if you have loans to pay. To live within 70% of your income is indeed difficult. If the rule is not applicable to you as of the moment, then you can start with what is workable to your budget. Before, I started 90/10 because of the loans that I have to pay. And since majority of my budget goes into paying my debts, I prioritize those loan which bears interest. For quite sometime, I was able to pay as well those loan from other person which doesn't earn interest. After 3 years, I was able to implement the 70/30 rule.

If you are still looking for additional source of income, then you can start immediately in managing your expenses. At least, something is happening in your personal finance.

In managing your expenses, please take note of the following advice:

1. Make a budget. 


Have a dedicated notebook where you can list down all your expenses up to the last cents. Why? Because by doing this, you will have a clear picture where you money goes. Just do it for 2-3 months. After that, you will be able to analyze which areas of your life you spent too much. It might be on your food, your leisure, or you bought a lot of stuff which are not necessary. You will also notice here if you do save money, do you invest or not.


Once you know where you money goes, then the next step is to identify which areas of your budget that has to be controlled or where to cut your spending habit. Like a leaking faucet in your kitchen, that area has to be repaired immediately before its too late.

Lastly, by following the 70/30  rule, prepare your budget next month, next quarter or next year. This procedure will help you to identify what particular month you will get budget deficit because of a foreseen event in your life like birthday, anniversaries and so on.


2. Be a wise spender.


Every time you get money from your pocket, ask these simple questions: Is it necessary? Is it a need or a want? You have to know how to distinguish one from the other.


Personal finance is not being taught in many schools. Also, we learn things from our parent when it comes to money. If there are not good in managing their finances, most probably you also learned their money habits. The good news is, everyone can start anew. 

The financial aspect of our life is just one of the aspects that we have to manage. But this aspect is the most important one because it affects our mental, emotional and physical being. The time to change is now!









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