How To Kick-Start Serious Wealth Creation With Cash Flow Tracking [Includes Free Tools]
by Finnian Kelly
Money is the tool that covers our basic needs, funds our goals, and increases the variety of options we have for our life. As the tool that flows through EVERYTHING, it’s no wonder we want to have more of it!
It’s why we secretly long for that time when we’ll finally be debt-free or when we get a raise, a promotion, or a bonus.
But more money in itself isn’t the answer.
Think about the choices you made last time you got a raise.
If you didn’t increase your allocation into your savings or investment accounts, you’re not alone. It’s not uncommon for someone’s lifestyle to expand into their additional income.
Did you actually get richer OR
Did you create a more expensive lifestyle to maintain?
Cash flow tracking is the first step to wealth creation
A lot of members come to us with a similar problem.
They earn a decent income, but when they look at their finances and their assets, they’re not sure what they have to show for their money!
Here’s the problem… society has made it all-too-easy to spend. Credit cards, online shopping, one-click checkouts lower the friction. $20 here and $50 there doesn’t feel like much in isolation but make these choices frequently enough and the amount soon builds up.
[Ever had that sinking feeling when the credit card bill lands and it’s a lot higher than you expected?]
It’s a frustrating problem to have because there’s a part of you that knows you could have been further forward financially if you’d made different spending choices.
A cash flow tracking system is the most powerful way to get your spending under control.
When you track your cash flow, there’s no more guessing or pretending or overlooking. Instead, you know exactly where your money is going, which gives you back control over your money.
If you’re not a ‘numbers person’, I get how the thought of spreadsheets and formulas can push you over the edge. But once you get started, you’ll realise it’s not nearly as painful as you think! Even better, the results are more than worth it.
Suddenly, you can see all the places where your money is going.
Better still, you can decide if you still value that expense – or not.
In turn, you can claw money back by making different choices – freeing up money to allocate and invest elsewhere.
It’s a small shift that makes a MASSIVE difference – often quicker than you might expect.
Here’s how to track your cash flow.
- Download our FREE cash flow management tool HERE.
- List out ALL your expenses and add them to your tracking tool. Be that financial detective.
- Look over your budget line by line. Remember to check your bank statements and credit card bills too because there will inevitably be monthly expenses you’ve forgotten about.
Get it all out into the open because once you have clarity over your spending habits, you get to take back control.
With your cash flow tracked accurately, you get to make some new wealth-creation decisions.
1. Allocate your income intentionally
With your cash flow mapped out, you get to ask yourself some empowering questions:
- Are you spending too much on your everyday bills and expenses?
- Are you putting enough money into investments and savings?
- Are you building funds to spend on the things you value?
The 50/30/20 tool is a super simple way to access the effectiveness of your current spending habits. The formula is simple. Allocate:
- 50% of your income to your PEACE pot – to cover all your essentials.
- 30% of your income to your PURPOSE pot – to take care of the things you want.
- 20% of your income to your POWER pot – to build investments and assets that create more choice.
Of course, everyone’s situation is different so remember, the 50/30/20 rule CAN be broken. But as a benchmark, it’s a great place to start.
You can calculate your allocations with the 50/30/20 tool when you CLICK HERE.
2. Start investing
If you want to build wealth, you have to invest [with expert guidance]. It’s pretty much essential. Investments are not the same as savings. For sure, savings are an important part of your wealth portfolio, but this ‘liquid’ asset is too accessible. What’s more, most people have a mental limit on what they think is a ‘good’ amount to aim for. Once you hit that limit, you’ll struggle to save more.
When it comes to investing, there’s a big problem… The financial industry has done a really good job of making the investment world feel inaccessible and complicated. It’s why a lot of people never commit to an investment plan – it just feels too hard, too risky, and too scary.
Here’s the thing…
It’s easier than you think to start investing – and you don’t need to have as much as you think to benefit from this strategy. As little as $100 a month is a great place to start.
It’s always smart to get professional advice before you invest. Everyone’s risks and situations are different. This is definitely something that WE can help you with.
And if you\re telling yourself that you don’t have the funds right now, once again your cash flow management will help you. I’ll show you how in step 3.
3. Create a budget
Wealth-creation is actually incredibly simple.
All you have to do is spend less than you earn and invest the rest.
The key to having money to invest is to build your SURPLUS. This is the gap between your income and your outgoings [you can calculate this with your cash flow management tool]. The bigger the gap, the more investment potential you free up.
You don’t have to wait for an increase in your income to increase that gap. There are things you can do right NOW.
Again, your cash flow management is the key to increasing that gap. All you have to do is be intentional with where your money goes and cut unnecessary expenses so you can increase that surplus figure.
This isn’t about being stingy or being needlessly frugal. WE want you to have an abundant life. WE encourage you to set the intention to build wealth so you can give yourself more choices.
Instead, it’s about removing the unnecessary spending that doesn’t align with your values. Eliminating those costs will increase your surplus AND give you more choice.
When it comes to your budget, one of the biggest levers you have to pull is the amount you allocate for your personal budget.
For most people, their personal spending [the amount they spend on going out, spontaneous purchases, and little luxuries] is one of the most fluctuating and unpredictable aspects of their monthly cash flow.
Give yourself a budget that’s designed to increase your surplus AND that you stick to, and watch your wealth grow.
Discover more about personal spending HERE.
Working to a monthly budget is a good benchmark. However, if you have unhelpful spending habits you’ll likely find a weekly budget more beneficial. One bad month can wipe out all your good work and leave you playing catch up. Weekly reviews help you catch issues early, so you can fix things before they get out of hand.
4. Have an independent person look over your cash flow
You can learn a lot from a fresh pair of eyes on your everyday spending decisions and financial plans.
Not only can you unlock some easy wins, but a trusted person can kick-start those harder money conversations about your habits:
- Are you spending too much on a particular service or subscription?
- Is that ‘essential’ really a ‘want’?
- Have you put enough emphasis and focus on your investment strategy?
Working with a financial coach and advisor can empower you to go a lot further and faster. With expert support, not only will you feel inspired to make better choices, but you’ll be held accountable to your plans as well.
To discover how WE membership could be the solutions to your wealth ambitions, check out this article.
A desire for more financial peace, purpose, and power is a very good intention to have for your life.
While money can’t buy happiness directly, it does give you a lot more freedom and control over your life.
More wealth comes from intentional choices that are built around robust financial strategies, tactics, and tools.
As we’ve explored in this article, cash flow tracking is one of the most powerful steps you can take to transform your personal situation.
So get tracking today!
And remember, you don’t have to do this alone. WE membership is here for you.
There’s a lot to gain from booking a call with one of our coaches. You’ll discover what could be possible for you and your money when you have an expert team in your corner.
It’s a decision your future self will thank you for!
Disclaimer: all information contained within this article is of a general nature and should not be relied upon when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.