Personal cash flow management creates a balance between cash cash flow and out out – two different phases in one’s financial journey at the beginning of his career. The first is the accumulation phase, while the last withdrawal phase.
Cash flow management during the accumulation phase ensures that your outflow is less than the inflow so that there is a surplus of money left to be saved and invested. Savings, when invested carefully, make the corpus.
Cash flow management during the accumulation phase ensures that your outflow is less than the inflow so that there is a surplus of money left to be saved and invested. Savings, when invested carefully, make the corpus.
“Personal cash flows are important because it allows you to identify where your income came from and how it was spent,” said Sushil Jain, CEO, PersonalCfo.in. “You can then use this knowledge to determine how much everyday costs you want to sacrifice so you can have more surplus to be included towards future goals.”
In this way, if you have negative clean cash with long term, you will never achieve financial freedom.
Anup Bansal, Chief Investment Officer, Scripbox, said, “Ideally, someone must try to save 30% inflow. It is possible that in a certain month, the outflow is more than the current inflow for a requirement for a goal or emergency. will ensure that you have planned for the purpose and emergency. Often, savings may not be enough to make large purchases such as houses, cars, etc., so you might have to spend a loan to this requirement service. The outflow because EMI for loans is part of a part of Personal cash flow management. You always have to maintain a balance between current needs and save for the future. Overall, Corpus needs to continue to grow for one to achieve financial freedom. “
Cash management during the withdrawal phase ensures that your outflow is served by the available Corpus made during the accumulated phase. Corpus is needed calculated and different for different people and based on a person’s lifestyle, inflation rate, and distinctive age assumptions. In general, there is no big purchase during this phase. Implementing effective withdrawal strategies such as a systematic withdrawal plan (SWP) during this phase is very important.
Bansal said, “The management of personal cash flows that effectively involves savings in the first expenditure, budgeting, tracking fees, purpose planning, managing payment cycles and managing liquidity. The best is to make a statement of inflows and every year to track. You have to work with that advisor qualified to create a financial plan that includes personal cash flow management. “
Jain said, “The more money you have, the more money you will make. The more money you make, the faster you can build your finances.”
Therefore, the faster you build your finances, the faster you will achieve your financial goals. Therefore, you must always get your personal cash flow management correctly.
