When we talk about increasing cash on hand, we can take action by doing one of two things: reduce spending or increase income. A very common trait we continue to see is the opportunity for managing and cutting down excess spending in places that may be better allocated elsewhere. Below are some key points that can be taken to reduce expenses and increase extra cash at the end of each of month.
1. Create a Spending Plan.
Many people resist the idea of a budget, associating it with hardship. Instead, look at it in a positive, proactive way. Create a monthly “spending plan” for your fixed and discretionary (optional) expenses. When you plan your spending, you may find you spend more wisely.
2. Saving and Investing.
Put savings and investments at the top of your spending plan. If you wait until the end of the month to invest any leftover cash, you may find yourself with an empty nest egg when you need it most. Also, the sooner you begin investing, the better. A dollar invested today ought to be more valuable than a dollar invested tomorrow.
3. Track Your Spending.
Record your expenditures for a month, especially for small optional items. You may be surprised to discover how easily purchases costing only a small amount add up. At the end of the month, review your expenditures and adjust your spending plan accordingly. Once you see where your money is going, you may want to make different choices about your spending. All of our active clients have access to their personal financial planning portal, in which you can view a collection of all of your past and active spending, broken down by each category to identify excess expenses.
4. Minimize Debt.
Keep your debt level low. By reducing debt, you also minimize interest and finance charges. When you are tempted to charge a purchase, remember that you are committing yourself to pay for it from income you have not yet earned.
5. Set Aside a Cash Reserve.
While this is at the end of this list, this is perhaps one of the most vital financial planning resources that we can urge. Having a cash reserve can help you stick to your spending plan, and keep you out of debt when emergencies, such as a major car repair or short-term disability, arise.
As always, please do not hesitate to contact us with the questions you have regarding your planning goals or concerns this Fall.
Simonet Financial Group, LLC
Phone: (512) 296-8962