I recently came across an article titled something like, “The One Word Financial Experts Want You to Know.” On reading it, I discovered that the one word was “Budget”. The writer didn’t come out and say so, but that turned out to be the topic.
Budget. Doesn’t that word make you feel all warm and tingly? Yeah, me neither.
Budgets are awesome if you stick to them. Heck, the United States government puts together budgets, but always spends more than allocated. Yep, that’s what can happen.
So, is a budget THE solution? I don’t think so.
I’m more attuned to cash flow. One can have a budget, but if more money is being spent than coming in, it’s not good.
For me, Positive Cash Flow are the words.
Simply put, Positive Cash Flow means more money is coming in than being spent. That means profit; profit that can be invested for the future. Investments are good, actually awesome because investments make more money.
Budgets are a “dime a dozen.” Dave Ramsey talks about giving each dollar a name in the budget. That’s all fine and good if more dollars are coming in than going out. Budgets are just lists of categories. They don’t keep overspending from happening.
Nope, monitoring of cash flow and proactive adjustments will keep that from happening. If you make sure that you’re spending less than you’re making then you have positive cash flow and positive movement in maintaining your finances.
I like cash flow when it’s positive.
On the other hand, you can have negative cash flow; spending more than you make. I call that “Having More Month Than Money.” It sucks. We were there in our early years of marriage, but we haven’t been for some time, now.
Yep, we racked up credit card debt. Oh, we financed land that we had no business buying either. It caught up with us.
We finally learned that Positive Cash Flow was the answer to our financial issues. We cut down on using credit. We cash flowed my second degree. Thankfully, my folks paid for my BS, but we paid for my MEd. I’m quite proud of that. NO school debt!
We still have some debt, but we have a positive cash flow so it’s not so much an issue. Even so, I do want to get us out from under it, and we’re working on it.
How about you, is it Budget or Positive Cash Flow?
We are in the positive cash flow at this point but for years I struggled with a budget. I was dumping in tons of money trying to get rid of the debt and it took awhile but I finally got there. Now we are saving 70% of income and really making great progress in our quest to reach FIRE.
Awesome to hear! Isn’t it a great feeling? We’re back to a bit more debt than we had, but we still have a positive cash flow. Definitely working on the debt. Congrats on the progress towards FIRE. All the best with it. I’ll be looking forward to when y’all reach y’all’s goal.