Peter Boys, Boys Financial Services

Cash Flow Problems?

Stressed Lady1

In today’s hectic world, I’m finding a concern across all age and income levels is managing day-to-day cash flow. Many Canadians are running out of money before running out of month, and are making up the difference with lines of credit, credit cards and charge accounts. Banks, credit card, and finance companies love to collect the incredible amount of interest we end up paying due to a lack of the basic financial skills needed to manage our finances. If this sounds familiar, maybe there’s a need to learn and apply some changes.

Unfortunately, most high school students leave with little financial savvy, into an increasingly complicated world where credit is viewed as a right, and payments are tailored to cash flow rather than affordability. An 84 month new vehicle loan may make the payments seem affordable, but it glosses over some important financial considerations. It’s important to fully understand all of the related ownership and operating expenses, and the negative impact of depreciation when they sign on the bottom line.

Taking control of your finances requires first admitting that your cash flow is getting out of hand, then finding a trusted financial mentor to learn how to fix the problem. Here are some different situations that you might want to get some help with, to learn how to understand and take control of your finances.

Cash Flow Enhancement: To help you or reduce your monthly interest costs, find extra cash to address spending needs, and ways to become debt free sooner.

Cash Flow Optimization: To help you to better manage the variability of income and expenses if you are self-employed, commission paid, or subject to seasonal work layoff. To be better prepared for unexpected expenses, simplify your finances, or plan ahead to fund an upcoming expense.

Cash Flow Stability: Helping to ensure debt-free home owners have access to sufficient cash flow to meet day-to-day expenses without resorting to expensive reverse mortgage schemes. Having access to additional funds for unexpected expenses or emergencies if needed.

Special Situations: For those considering a borrow-to-invest strategy, helping children with a mortgage down payment, purchasing a rental property for extra income, or for funding a small business start-up.

You can start by simply recording all your bank and credit card transactions. This serves two purposes. First, it reveals where you are spending your money. Second, it allows you to check for errors or unauthorized transactions. This should be done regularly, as these are harder to resolve weeks after the fact. These tasks can be made easier using a cash management program such as Quicken.

Several months ago I noticed a large number of PayPal charges to my credit card. I immediately phoned the card company and reported the problem, which was resolved quickly and all the charges credited back to my account.

An old expression “Forewarned is forearmed” comes to mind, because you can’t manage and control what you don’t know or understand. If you want to get started in taking control of your finances, seek out a trusted financial professional to learn how to budget and manage your cash flow properly.

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