Cash-Flow Management Beats Budgeting

Simple steps to get control of your expenses.

by Womens Toolbox • Member { View Profile }

Let me start off by saying there is one word that should be removed from the personal finance dictionary and that is “budget”. It seems to elicit the same response as “root canal”! So when thinking about income versus expenses over a particular period of time, I much prefer to use the term “cash flow” – it almost sounds inviting, like a gently flowing river!

Certainly, you understand that money is important, but the bottom line is, you must proactively direct the flow of your cash and take control of your financial life.
A good way to get inspired about money management is to focus on what you want your money to do for you. First, get a sheet of paper and write “My GOALS” across the top. Then take some time to think about what your short and long-term goals really are. (Short-term is typically one year or less.) Do you need a new car ASAP? Are you in desperate need of a vacation? What are the things that will benefit and please you the most? For longer-term goals, imagine what your happy and fulfilling life will look like in twenty or thirty years.

When that list is somewhat complete, write down the things that you want and need in order to make your life comfortable right now, like shelter, heat, food, transportation, and clothing. These are important goals, too.

Combine both lists and rank the goals in terms of importance or priority. For example, is living in an apartment on your own more important than a week-long vacation? Would you rather have a roommate and save money to have a down payment for a house?

Tape this new high-priority list on your refrigerator door or bathroom mirror so it can be your daily inspiration. As you work to reach these goals, the steps that are necessary to achieve them are much less painful!

At this point you can create a cash-flow plan that covers your basic needs and allows you to save for your goals. It may be necessary to adjust your spending or increase income to execute your plan. Perhaps working overtime or getting a part-time job would be easier than cutting more expenses. Remember, you are in control of your financial situation so you can evaluate all of your financial options and decide the best way to adjust your cash in-flow and/or out-flow.

When you have a cash-flow plan that looks reasonable and includes money for emergencies as well as goals, make your savings automatic. What you don’t see you won’t miss or miss-use. Look into opening a savings account at There you can identify your top savings goal, get a virtual piggy bank and invite your friends and family to help you fill up your pig. With a plan, you can be the captain of your cash-flow and reach your goals. 


Get more great advice from Diva Toolbox Contributor, Hollis Colquhoun!

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