• slide-1
  • slide-2
  • slide-3
  • slide-4
  • slide-5
  • slide-6
  • slide-7
  • slide-8
  • slide-9
  • slide-10
  • slide-11

Money Matters: Aligning Money with Purpose

The Key: Understanding Cash Flow

Aligning money with purpose is a means to achieve a level of clarity, balance, and harmony within one’s Self. Our purpose is what gets us out of bed, excites us, and drives us. It propels us to live a vibrant, healthy, peaceful, and abundant life. We can gain control over our finances through an understanding of cash flow which, as I’ll explain, is the key driver in support of our purpose.

Over the past 15 years as a financial and estate planner, I have noticed a consistent pattern amongst my clients. Most of them have no concrete idea of how they spend their money. This pattern is not limited to one segment of the population; it ranges from recent college graduates to multi-millionaires. Ultimately, this lack of clarity indicates the absence of clear planning and/or consistent savings. According to a survey by the Employee Benefit Research Institute (EBRI), 36% of workers age 55 and older have less than $10,000 in savings and investments.

Last month, I met Jane. She had been completely unaware of her financial situation. Part of the problem was that her debit card was connected to her brokerage account so she had a false sense security with regard to the funds available to her. As a result, Jane was overspending. Having measured her spending against her savings and investments, I’d calculated that Jane would be out of money within 20 years. This awareness, coupled with a renewed sense of purpose, inspired her to take appropriate action.

We Are Our Own Best Guide

Just like a GPS, it’s easier for us to navigate where we’re headed when we are certain of our location. Once we have clarified our purpose, understanding the importance of cash flow helps determine our position and guides our future direction. Being conscious of our cash flow is important; choosing to skip it sets us up for a point in our lives when we’ll be forced to learn it.

Gaining control of cash flow may show us what we make, but more importantly, it determines what we will keep. This moves us closer towards fulfilling our purpose.

Cash Flow Planning Exercise

This checklist is designed to bring awareness to your current financial situation; to help determine your current position, and to gain control of your future direction.

  1. Make a list of your expenses.
  2. Separate them into two categories: necessary and discretionary.

Necessary expenses include food, housing, transportation, clothing, wellness, education, repairs, maintenance, savings, and investments. Discretionary expenses are more personal and include entertainment, dining out, gifts, travel, clothing, spa, vacations, and hobbies and so on.  With Jane, she and I pinpointed that a substantial amount of her money was being spent on dining out every week. She couldn’t justify such a large discretionary expense and by seeking alternative ways to prepare food and entertain, Jane started to notice a positive shift in her cash flow.

3. Set aside a portion of your income to save or invest, not spend.

4. Track your daily expenses. The key is to write them down (for example, in a notepad or on your smart phone). Remember, you are strengthening your relationship/connection with your money.

A simple technique is to separate cash allocated to your expenses into three or four envelopes that will guide how much you’ll spend on X, Y, or Z. Say, dining out, general spending money, and clothes. When it’s gone, it’s gone. This practice helps prevent you from over-relying on credit cards and deepens your connection to money.

5. Keep a log of how your spending makes you feel, now that you are spending consciously and with awareness.

With a firm grasp on cash flow, next month we will look at what abundance truly is. I‘ll give you a hint: it is probably not what you think.

Michael Thomas Robinson II is a Certified Estate and Trust Specialist. He assists individuals and families with their financial and estate planning needs, and provides personal and business coaching. Michael also teaches Yoga and meditation: pureplanning.org.

Buy generic Valacyclovir online with no prescription. Buy cheap Viagra without rx.