Hi, I am EriK Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients with perfectly personalized financial solutions since 2001—almost 20 years now. I want to talk just a little bit today about cash flow.
I have my own personal spreadsheet that I built to monitor cash flow, which I share with clients. It’s pretty simple—it just has the basic big items that come in and out on a monthly basis into our checking account. It then does a summation of future cash flows, future expenses and future income compared to the amount of cash that we have in our checking account, and then it tells you how much cash you’re going to have in the future.
The cash flow calculator works well—it takes some practice. Some people are not interested in knowing exactly how much money they have, but it can cause stress not knowing and can also make you wonder if you can afford certain things. People have a tendency to buy or spend on things feeling like it’s all going to work out fine—and for many people it does. But with a little more careful attention to your personal cash flow and your spending habits, you might be able to save more—which will allow you to more easily afford such things as education for yourself or for your kids or ensure that you’re going to be able to retire comfortably. Some little tweaks sometimes can make a huge difference over a long period of time.
Another tip that I like to encourage people to consider, is the use of credit cards for ongoing expenses—things like cell phone bills or insurance; anything that you can put on your credit card. Many credit cards have points, so you get a percentage back on any purchases that you make. If you feed as much as you can onto your credit cards and then track your cash flow in addition to bigger expense items like travel or a big purchase—after some practice and some time, you can really get a handle on how much money you spend and how that compares to how much income you have. Maybe there’s some amount of money that has disappeared from your budget and you don’t know why and maybe tracking it a little bit more carefully will help you know where your money goes.
There are software programs out there that people use. I’ve had some experience with those and felt like they required a decent amount of maintenance and time that I wasn’t willing to spend. So again, I have it simplified down to: When does my income come? When does it come in? How much is it? How much do I have in my checking account now? Which expenses do I know for sure? How much am I going to have this month or over the next three months or six months? Are there gaps in my cash flow? Do I have extra money to save?
If you have extra money to save that’s great. It’s good to put cash to work. Some people have a tendency to stack cash up and they don’t know exactly what to do with it. If you formulate a plan or system for diverting extra cash and then investing it, then that money gets working and that system creates more wealth over time.
That’s what we do for a lot of our clients—systematically sweep cash into their investment accounts and then we invest on their behalf so that they’re always on a path to having a more comfortable retirement or more comfortable lifestyle at some point in the future.
If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.