5 Steps to Improving Personal Cash Flow

October 30, 2023 · 5 minute read

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5 Steps to Improving Personal Cash Flow

Your personal cash flow — or, how much money is coming and going through your personal budget on a regular basis — always has room for improvement. You can improve your cash flow, too, through various means, such as asking for a raise, starting a side hustle, and more. That, of course, paired with cutting excess spending, can help improve your financial standing.

In a sense, you’re your own chief financial officer, or CFO, and in charge of doing what you can to stay on top of your finances. With that, there are a multitude of things you can do to improve your personal cash flow. But if you want to pare that to-do list down, you can start with six key actions.

1. Ask for a Raise

A salary increase is perhaps the easiest and quickest way to improve your personal cash flow — and it requires the least amount of effort. But you must first muster the confidence to ask for one, and prepare yourself for a meeting with your boss to make sure you end up getting a raise.

Unfortunately, most employees may be reluctant to ask for a raise — in many cases, because they believe it’s awkward to talk about money with a manager. Managers, however, are not necessarily looking for ways to increase their expenses. So, if you want a raise, you’ll likely need to take action rather than waiting for one to fall out of the sky. That will require having an idea of what your market value is, and what your employer can realistically afford.

You can always look for another job, too.

2. Start a Side Hustle

A side hustle is simply a second or secondary job, and many people employ them to bolster their earnings. There can be many benefits to having a side hustle, with the extra cash, of course, likely being the most obvious.

For instance, by taking on additional projects, you’ll gain experience that will pad your resume and uncover opportunities to make new connections. You might even find yourself entertaining an offer for a new — and better paying — position. If you don’t know where to start, either, some low-cost side hustles include tutoring, flipping furniture, or even digital marketing.


💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

3. Track Your Spending

Increasing your income is part of the equation, but slowing your cash outflows is also critical. That means tracking your spending, and finding ways to slow that spending in order to save more.

There are also services out there that can help you not only track your spending, but analyze that spending, too, and find opportunities to cancel services you barely or never use. An internet search will reveal several of them. Reviewing your bank statements, too, should help you find other areas where spending could potentially be cut.

You can also try measures such as only using cash to keep your spending under control, along with other strategies.

4. Simplify Your Life

Selling everything and moving to a tiny house may sound nice, but if you were to actually do it, you may find yourself missing some of the modern world’s creature comforts. With that in mind, if you want to simplify your life (and financial situation), it may sound like a good idea — but you should take some time to think about what you really need, and what you can do without.

For instance, many people could probably cut their clothing budget without too much trouble. But is it possible to also downsize and relocate to a new apartment in a less trendy but more affordable area? What about clearing out that storage unit that you’re spending money to rent? Simplifying your life could result in savings, but there’s a lot of thought that should go into any big life changes before they’re made.

5. Review Your Debt

Being your own CFO means that your finances — including your debt — are under your control. As such, you’ll need to know what debts you have racked up, including credit card debt, student loan debt, auto loans, personal loans, and more. It can be difficult to face your debts head-on, but if you’re serious about improving your financial standing, it’s a critical step to take.

Also, take a look at your debt to income ratio — your monthly debt payments divided by your gross monthly income. Let’s say your gross monthly income is $7,000, but each month you pay out $1,500 for rent, $600 for credit card bills, $500 for student loan payments, and $600 for other debt. Your debt to income ratio is 46% ( $3,200 divided by $7,000). A high debt to income ratio — typically over 43% — makes you riskier to potential lenders, and can cost you a new loan with a good rate.

Imagine bringing your rent down to $1200, knocking $200 off that credit card payment each month, and bringing your student loans down to $300; your debt to income ratio would decrease to just 36%.

Investing With SoFi

Improving your personal cash flow — a critical step to take if you want to be your own personal CFO — is important for just about everyone. Finding ways to increase your earnings or income, while also finding ways to pare down expenditures, should help you reach your financial goals in the long term. There will be hiccups along the way, of course, but with some discipline and know-how, it’s doable.

And don’t forget to share what you’ve learned; you probably know someone who could use the advice. Support and encourage your friends, and then help each other stick to individual goals. As always, if you want more guidance, you can get in touch with a financial professional.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.


Photo credit: iStock/visualspace

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