Money is the source of both joy and stress. We all need a consistent operating cash flow to pay bills and provide a stable living. However, making sure you have enough money at all times is the hard part. Read through the following tips to ensure you never have operational cash flow problems.
Diversify Your Operational Cash Flow
This tip is another way to say the age-old statement of,” Don’t put all your eggs in one basket.” Consider alternative ways to make money, even if you have a full-time job. Have a side hustle or do freelance work in your field to make extra money. Think about if you have a special talent or interest you can market to others. You’ll still have an operational cash flow coming in even if you lose your main job.
Higher Income Equals More Operational Cash Flow
Income can come from a variety of sources. Those include a salary, bonuses, investments, self-employment, or a part-time second job. Put any financial bonuses aside in a savings account. Any money you earn from a part-time job or side hustle save as well. It get you in the habit to systematically save.
There’s No Operational Cash Flow With Debt
According to Experian’s 2019 Consumer Debt Study, Americans have a total $14.1 trillion dollars in debt. The average American has $90,460 in debt. If you are in debt, don’t panic. Understanding your debt is the first step to getting out of it. Know what debt you have and each interest rate that is tacked onto every debt.
Start paying off the debt with the highest interest rate first. See if you qualify for a personal loan or student loan refinancing. Then, set up a payment plan and stick to it.
Income to Debt Ratio
A high income to debt ratio makes you risky to lenders. Pretend your gross monthly income is $5,000. From that you pay out $1,000 for rent, $500 in credit card bills, $500 in student loans and $400 in extra expenses. That’s a total of $2,400. Divide $2,400 by $5,000 to find the debt to income ratio. In this case, it’s 48%. A debt to income ratio that’s over 43% is considered high. You want a low debt to income ratio to qualify for loans with good interest rates.
If you have a high debt to income ratio, consider cutting down rent costs or not money to credit cards until they’re paid off. Debt takes away from your cash flow.
Stick to a Budget
Most of us have been told to create a budget and stick to it. This advice works. Create a budget that you can realistically do. Take an honest look at yourself and your spending habits. Can you do without a manicure every two weeks? Do you really need a gym membership? Can you cook more meals at home? Could you turn the thermostat down a little to save money on your heating bill? Small lifestyle changes will add up to cash flowing in and staying in. Think creatively to find ccx ways to save money.
Simplifying your life will cost you less money in the long run. You will find you have less stress along with a higher cash flow when you simplify your life.
Record Operational Cash Flow Coming In and Out
One reason people have a financial crisis is because they don’t pay attention to where their money is going. You are your own CFO. Treat your personal finances as if they were your business’s. Know what money comes in and what money goes out. Many cash flow problems can be solved simply by understanding how much of your money is going to what purpose. You will get a sense of where your money is going and where you can cut back when you understand where your money is spent.
Negotiate a Raise
Earning more money brings in more cash flow. Keep these tips in mind while you ask for higher pay.
- Talk about how much value you add to your company. Are you a leader in sales? Do you effectively train new employees? Make sure whoever you’re talking to about a raise understands how valuable you are to your company.
- Find out how much other people are paid in your field. Tell your employer that you want to be competitively paid.
- Focus on what makes you different from your colleagues. Are you proficient with technology or social media? Bring up what makes you unique.
It may be time to switch employers if negotiations do not go in your favor. Know your value to a company.
Cash doesn’t control you. You control it. There are many ways you can cut back or increase your operational cash flow coming in. Pay off your debt. Understand where your money is going. Make a budget and stick to it. You’re in charge of your operational cash flow.