1. Check out Coach on the CouchMay 2009
NEW:
Money Talks with Lisa: 7 Cashflow Secrets They Don’t Want You To Know
by Lisa Newton
It amazes me that there isn’t a subject called “Your Money Or Your Life” taught
in schools.
We all deal with money every single day and in every country
in the world, there's some sort of monetary system whereby people can
trade.
Some of the
most important numbers are the value of the global financial markets, The
Dow Jones is an American index, and the FTSE 100 is the UK version. The Footsie
100
figure is the overall value of the 100 biggest traded companies in the
UK. If the number increases – there was more buying of stock, and if the
number decreases, there was more selling of stock.
But no-one teaches us about the financial money markets or (more importantly) cash flow – so this month I'll outline what you should know (or rather what they don’t tell you)…
.
1. Cashflow is all about the flow of money
Cash can flow IN to your pocket or OUT of your pocket. We know this. But the most important thing is to understand the step before this. What CAUSES the flows? Expenses cause flows out, and Income causes inflows. You need to reduce or stem the flow outwards, and increase the income. Think of a pipe leading to your bank account. You want a big one coming in, and a little one going out.
2. Time is money when you earn money.
Most people sell their time to earn money, but this is where they go
wrong. There is a limit to the number of hours available to you to sell;
there are only 24 hour in a day. And there is a limit to what you can
charge for your time, (no matter who you are) Hence those that work harder
and harder for earned
income find that they don’t necessarily get ahead. They just get trapped
in the
rat race.
Ideally, you need to put your time to good use. Just as you shouldn’t
waste your money, you shouldn’t waste your time. You can always earn more
money, but time, once spent, is gone forever. Spend your time building
cashflow / building your pipeline.
3. Be in control. Don’t delegate the responsibility of your financial future to someone else
Everyone else will always have a good idea about where
your money should go – to them / in their bank accounts is probably their
preferred choice.
Cash is indiscriminate of where it goes, so you have to control it. Plug
those holes in your pipeline, and make sure that any standing orders or
direct debits
that you have are where you really want your money to go.
Take
control of your spending learn the skill of managing your
money.
It’s not rocket
science. A lot of it is common sense shrouded in mystery. Its time to blow
the lid on ‘the secrecy’ once and for all.
4. Pay Yourself FIRST
What do I mean by this? It means you set up a standing order from your MAIN current account, TO your pipeline account. Call it: “My savings” and make sure you keep taking out and putting in. The principle of this is simple. You will find the money to pay for things that you owe to other people – they’ll phone you up, write you letters, knock on your door and generally hassle you until you cough up. So you will find it for them. But, no one gets on their own case to do the same for themselves. So, it’s important that we pay ourselves first. Take your money out of the equation, and then figure out how to sort out everyone else. That’s how it works. If you try and pay everyone else first, and keep what is left – you’ll find nothing is left. It’ll all be gone. Pay yourself first, and I promise you, you’ll find the cash to pay everyone else. You always do.
5. Appreciate the TIME VALUE of money
The next time you are running late and have to catch a taxi, paying 10 times the cost of what the bus fare would cost had you have gotten your act together, remember this column. Sometimes it pays to pay someone to do something that would take us all day. Do you REALLY need to go to the carwash every week? A bucket, car shampoo and soapy water – can you do it yourself? Little things we spend out on or ‘time saving devises’ are actually unnecessary. Keep an eye on your cashflow and on your watch.
6. Generate Passive Income to Increase Your Cashflow
The Internet has revolutionised the way business is done and will be done in the future. Business are no longer chained to passing trade. E-shop stay open all day and all night long (see: www.boogles.biz) – 24 hours a day, 365 days a year. But that’s not all – it’s open across the globe. Think of the trillions of people with Internet access and ability to shop in YOUR shop. People like Richard Branson don’t sell 1-2-1, they have multiple trains and planes and record stores and they sell 1-2-many.
7. Get rid of deadly costs
Cash flow is about OUTs as much as INs… we tend to focus on money
coming in, but its no good having £100 in, if £101 goes out! The biggest
challenge most people have in their cashflow, is that they have too many
costs.
Get rid of those high interest credit cards. Try and transfer them to a
0% deal, then cut them up. Or get a debt consolidation loan and stay on top
of those repayments (which should be cheaper than the credit card), and then
DON’T go out and do what most people do – which is borrow and pile themselves
up with debt again. Keep it clean.
Stop buying “stuff” – buy necessities (make
sure you understand a necessity from a luxury!), and keep your cash when
it flows IN. Some things e.g. rent are a wasted expense. Any chance of turning
that into a mortgage and benefiting from the payments that you are making?
It’s your cash and you deserve to see more of it.
Too often people work
hard
all their lives and have nothing to show for it. Don’t be one of them.
Lisa is the owner of Boogles Ltd, a bookkeeping company in London that manages the books, money and finances for many businesses. Before you start a business, you need to get your own financial house in order. Although Money may seem like a dirty word, or a taboo subject for some... it isn't for Lisa. MONEY TALKS.
www.booglesltd.com www.yurbroke.co.uk
Read Lisa's earlier columns here
Your Say
Send your comments to: comments@preciousonline.co.uk with 'lisa' in the subject.
Lisa's columns contain a lot of info and are helpful. Maybe you could run them
one chunk at a time. Thanks, Mary, Enfield