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Get a new perspective on cash flow planning


People often say managing spending is as simple as spending less than you make. But if it were really that simple, you’d be ensured financial success.

The bad news? Cash flow planning is about a lot more than math. The good news? You can succeed with a written cash flow plan — no matter your income. Your advisor can help, because cash flow planning is about more than you may realize.

For example, behaviour is key. A budget will do little good. Even tracking spending is not effective over the long term, as it’s only recording history. Cash flow planning has many subtle and effective behavioural spending techniques. These strategies begin to affect your purchasing habits within days, and people often see significant results within the first two to three months.

You might also think cash flow planning is about consolidation. But consolidation gets you thinking about lower monthly payments, which actually make your debt cost more over time.

In order to make a cash flow plan work, you must be completely committed to your goals. This is also where your advisor comes in.

You might choose goals such as “becoming debt free,” but don’t be fooled. People rarely permanently curb shorter-term or daily spending, so that many years in the future they might become debt-free. There’s no emotional attachment to such a goal.

Instead, you must highlight your reasons for being debt-free in order to make a commitment. For example, maybe you want to work only four days a week. That’s a specific goal that’ll no doubt inspire your commitment.

Get started on cash flow planning today by thinking about your own reasons to make a commitment.

Stephanie Holmes-Winton is a Halifax based financial services educator and speaker.

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