Picture this: It’s the end of the month, you’ve paid all your bills, and even had a little fun. You’ve made ends meet, as you always do, but your savings account isn’t growing and there’s nothing left to fund an emergency should one arise. Sound familiar? If you’re just breaking even—or worse, spending more money than you’re taking in—you’ve got a personal cash flow problem.
Maybe you’ve been living this way for a while, and it now feels normal. But here’s the deal: Without a positive cash flow (meaning you earn more than you spend), it’s hard to get ahead financially. Until you’re in the black, you could be shut out of good financial opportunities—including getting low interest rates on personal loans, or a mortgage loan, or even student loan refinancing. You’re also missing out on the money you could be earning by investing what you save.
The good news is, it’s possible to turn that around. You’re the Chief Financial Officer of your life, so it’s up to you to learn exactly how to improve your monthly cash flow. It will take some work, but by increasing your income and lowering your expenses—both fixed (rent, utilities, and car payments), and discretionary (entertainment and clothing)—you can make dramatic shifts in your financial life. Follow this six-step plan, and you’ll see your monthly cash flow move from negative to positive even faster than you’d expect.