Cash Flow Consulting
For most clients, we start with a consultation, and an assessment of where you stand financially. Typically, this leads us to cash flow consulting, which is often the first area we work together to improve.
Six Steps to Cash Flow Success
We start with cash flow to help build the foundation of your investment plan,
using our proven six-step process to cash flow success and, ultimately, an
investment approach that works for you.
You must have a positive cash flow to be a successful investor, and you shouldn't even think of investing unless you have tackled steps one and two.
- Step 1
Eliminate all high-interest debt, which typically means credit card debt. - Step 2
Save and keep one month's living expenses in a savings or checking account. - Step 3
Save and keep three to six months' living expenses in a money market fund. - Step 4
Put savings for any other planned major purchases in a money market fund. - Step 5
Invest to meet long-term goals, including bonds, mutual funds, stocks, IRA, 401(k) and real estate. - Step 6
Consider speculative investments, including tax shelters, hard assets and venture capital.
Budgeting
The purpose of creating a personal budget is to plan how you will spend your
money. If you have limited financial resources, a budget helps manage your
personal cash flow to meet current obligations and save for future expenses.
Creating and using a personal budget serves two important functions:
- It's your planning tool. Used correctly, your budget can insure that income and expenditures match, both in amount and timing. It can also serve to spotlight potential cash-flow problems and identify opportunities to make better use of current income.
- It's your yardstick to measure success. By comparing your planned budget against actual results, you can see if you are making progress toward meeting specific goals. This process will often highlight areas where you need to make changes.
Read about paying off debt on the next page....
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