Cash flow management and happier holidays. Just in time for the season!
Here is my tip on managing your cash flow and having more to spend. Good cash flow planning leads to better debt management. When the holidays are over you can feel naughty about what you ate and nice about not having overspent.
It doesn’t seem that long ago that I was blogging about the change of seasons and taking/sending our kids back to school. Suddenly, Christmas, Hanukkah, and many other religious and non-religious celebrations are upon us. Perhaps the unprecedented warm and sunny weather in Ontario this fall is part of the explanation why the holiday season crept up on us. I think this warm weather may also explain my reluctance to start my holiday baking, something I usually really enjoy.
The holiday season brings with it many blessings – we make an effort to spend more time with friends and family; we consider the less fortunate and how we might make their lives a little more joyful by contributing to their needs, and we enjoy the sights, sounds, smells and tastes of the festive season. However, this period of the year is often challenging to our cash flow especially if we haven’t planned for an increase in the number of celebratory meals out and holiday gifts. Wouldn’t you agree that it is just so darn hard to say NO to spending at this time of year?
I am a recent convert to the use of cash instead of plastic to pay for the weekly expenses that I can control. It is now eight weeks since I started cash flow planning by taking a fixed amount of cash out of my account each Sunday and using only cash to pay for groceries, cosmetics, gifts, coffees, meals out, entertainment and non-essential clothing. It had been so long since I had used a fixed amount of cash that I literally shook the first time I went to the grocery store and could not pull out a credit card to pay. I’ve had to learn to make a list and check it twice, just like Santa!
But guess what? Although I have been on a fixed amount of cash flow to pay for these types of weekly discretionary expenses, I am proud of the fact that I have said NO to some unplanned spending. Doing so has left me with some cash that I have put aside for upcoming holiday spending. Are you prepared for your seasonal expenses?
Cash flow planning is a new tool that I have brought to my clients. As Canadians prepare for retirement, some 59% of them are taking debt into their golden years. I blame this statistic on the virtual absence of any financial literacy education in our country as well as the low interest rates that encourage us to spend, spend, spend. Nobody brings to our attention that without sound cash flow management, while we may be able to afford to pay off our debts today, we may not find making these payments as easy when interest rates rise, as they are sure to do. This lack of consciousness around spending and debt is what can make the holiday season naughty as well as nice.
When your financial advisor goes over your spending and debts at the same time he or she reviews your insurance, assets and investments, what conclusions do you reach? Do you have a written cash flow plan and are you on track to retire debt free? Is there extra cash flow available each week for holiday spending, to fund your priorities, debt repayment and/or to add to your investments? Are you becoming more financially literate with each appointment?
If your current Advisor doesn’t provide this type of review, you might want to consider shopping for a new one in the New Year. It will be a gift to yourself. Contact me at 416-939-2000 for a short phone chat and I’ll let you know if I can be of service.
It’s just good advice.