How’s your Cash Flow? 3 Easy Ways to Improve it

How’s your Cash Flow? 3 Easy Ways to Improve it

Cash flow — the movement of money into your account (your income) and out of your account (your expenses) — is an important and often overlooked part of a financial plan.

Ultimately, there are two goals. One is to have more money flowing in than flowing out. The other is to time income and expenses so that there is money in the bank when payments are due. If cash flow is out of sync in either of these ways, you could be forced to either tap into your savings or borrow money to cover expenses.

Start with a budget
Ultimately, the cure for negative cash flow is to live within your means and spend less than you make. Having a budget, an inventory of your income and expenses, helps you see how you’re doing in this regard — and how you could improve. Make budgeting easy by using an online budget calculator, like this one from the Government of Canada. In just a few minutes, it will calculate whether your spending is over or under your income. Print it out, create a report, download it to a spreadsheet and then make adjustments necessary to ensure that you are cash flow positive every week.

Create an emergency plan
One thing that can really cause cash flow issues is an emergency situation or unplanned expenses. People without an emergency fund often end up running up expensive credit card debt, which can take months or years to pay down, taking cash flow issues from bad to worse. That’s why it’s wise to have an emergency fund. A good goal is to save 3-6 months’ living expenses as a cushion.

Consider a Manulife One account
One simple way to stay on top of cash flow and prepare for the unexpected is with a Manulife One account. This is an “all-in-one” product that combines your mortgage, bank accounts, savings, income and debts within a single home equity account.

A Manulife One account makes budgeting easier because you have a single account and one monthly statement. You see at a glance all the money coming in and everything going out — your entire cash flow picture.

It’s designed to help you reduce interest costs and become debt-free sooner, and it also offers a solution for unexpected expenses. If you encounter an emergency situation, you have easy access to funds without running up expensive credit card debt and without needing to set up a separate emergency fund.

Your Carte Financial Group advisor can help with every aspect of your financial planning, including generating positive cash flow, saving for emergencies and setting up a Manulife One account to help you get on top of your financial picture and improve cash flow.

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