Do You Have Adequate Cash Flow?

It is extremely important to keep a track on both - your inflows and outflows of money. If you are unaware of the areas that drain your money, you will never be able to curtail them and have a functional budget. The best thing to find out about all possible outflows of money is listing them. Once you are done with this, classify them into primary and secondary categories. You need to pay more attention to the primary category, which typically includes – food, rent, utility bills, EMIs, travel allowance and the like. You need to curtail your secondary expenses, like – shopping and eating in fancy places. Indulging in the 2nd category is appropriate only when you have adequate cash flow. If you are over-spending even in the primary category, then cut back on it as well. The key is to curtail over-spending, be it in primary or secondary category.

An example of finding out correct grey areas in a budget is as follows – Track all your expenses and incomes for a month. At the end of the month, review all inflows and outflows of money. It sometimes might even surprise you when you see the result. Sometimes you might be unconsciously spending more on a particular area and not be aware of it. For example – your brands of personal care products might be taxing you more than grocery expenses. So, do not blindly label any category as pricy or not before reviewing it thoroughly. If you keep following this routine for a couple of months, you will save enough money to invest in a favourite company of yours. So, maintaining a steady budget helps you not only in saving but also in investing. So, budget helps you twofold – saving and investing.