Master Your Own Destiny - Know Your Cashflow

Master Your Own Destiny - Know Your Cashflow

“Knowledge is the new Money” – Unknown

Mastering your cash flow is an essential part to achieving financial success. Your goal is to ensure you’re living within your means and saving for your financial future. Your future is created by what you do today, so plan ahead and use your cash flow now to create a secure future with more choices and freedom.

Use your cash flow analysis (that we discussed last week) to set priorities and make changes. Did you have money left over at the end of each month? If so, great! Your income and your expenses are balanced. But what if your expenses were more than your income? If this happens often, your cash flow is out of balance, and you have a negative cash flow.

How do you get back in the driver’s seat and start moving toward your goals again? The secret is to manage your cash flow wisely. When you get paid, allocate your money into three main accounts: Investment, Bills and Play Money.

1. Investment Account- “Pay yourself first”!!!

Put 10–30% of your income into a savings account, and promise yourself you will use it for investments only. This money is for building your financial future, and the investments will turn into passive income (money trees) for you. Don’t dip into this account for any other purpose, even if your first instinct is to pay the bills, mortgage, and other expenses. If you do that, you’ll have nothing left for your financial freedom!

Fantastic Savings Tool- Save Your Age Program

Even if you don’t have a specific investment in mind, use the “Save Your Age” program to invest small amounts of money regularly. This is a simple savings strategy you can use for your entire working life.

In brief: Save your age plus two zeros every year. In other words, it’s your age times 100.

For example, when you’re 20, your goal is to save $2,000 that year (which is only about $40 per week), $2100 the next year, and so on. It’s a simple and effective way of building up your savings without compromising your lifestyle

For example, if we assume a 5 percent annual rate of return, if you start at age 16, the Save Your Age program will generate a retirement nest egg of nearly $500,000 over a 40-year career.

To make this easier, authorise your paymaster to automatically transfer the desired amount from your wages into your savings. This will ensure it is painless and happens without you even thinking about it. Remember, we spend what we see and we adjust our spending habits to what we have left. So make it easy on yourself?—?if you never see the money, you won’t miss it!

2. Bills Account

Your cash flow analysis will tell you the average expenses each month. Put aside that money into a separate Bills account, so the money is available when the bills arrive. Ideally, keep enough money here for 3–6 months of bills, so you have a cash cushion if your income drops suddenly. If you have equity in your home, you can arrange a line of credit or offset account with your bank, and use this as your Bills account. That way, it’s reducing your mortgage when you top it up each month, and you have emergency money available if you need it (but only for emergencies).

3. Play Money Account

Don’t deprive yourself. It is important to spend money on yourself so you don’t feel like you’re missing out. So give yourself some play money each month, and spend it! You can now do this free of guilt because you’ve taken care of your investments and your bills.

For the Self-Employed

If you are self-employed or have some control over your income (for example, commission-based sales), work this system in reverse.

For example, if you have $3,000 per month in expenses and want to save $500 per month for your financial goals, you will need at least $3,500 in net income per month.

Review Your Cash Flow

Review your cash flow regularly. It changes from time to time based on major life events, such as changing jobs, moving house, marriage, divorce, deaths in the family, becoming part-time while raising children, becoming full-time as the children grow, and so on.

Regardless of your current cash flow, focus on how much you save, not how much you earn. We all go through periods when our income changes. In leaner times, focus on what you have (and how much you can save) rather than what you are not earning. Saving something is always better than saving nothing.


Mastering your cash flow ensures you’re living within your means and saving for your financial goals?—?an important aspect of becoming a financially free woman.

I have shared with you how important it is to know your cash flow and manage it effectively by putting as much as possible into money trees for your future. This is the foundation for wealth creation. You work hard for your money, so work hard to make it work hard for you.

Here are my Ten Rules for Making More with Your Money:

  1. Don’t spend more than you earn.
  2. Refer to rule number 1.
  3. It’s not what you make, it’s what you keep.
  4. Time is money.
  5. Know your spending habits.
  6. Make better choices.
  7. More money will not solve your money problems.
  8. Change your money behaviour.
  9. Build money trees and avoid the money pits.
  10. Never give up.

If you follow these rules and the rest of the guidelines I have shared with you, you’ll have extra cash for growing your money trees.

So how do you use that extra cash in the best way?

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