Many Individuals and young married couples start their financial lives with a much higher debt level than their Parents and work in a competitive employment landscape that features diminishing employer assisted retirement benefits. In addition job security, debt management and increased food and housing costs create a challenging environment to break out of a critical cash flow situation into more positive and rewarding longer term financial strategy. There is no easy answer to this dilemma. However the flow chart to the right illustrates two stages of financial planning. They are listed in a priority level to help you succeed.
We call Stage One “Critical Cash Flow Management”. The goal at this level is to try to focus on its two key components….Debt Management and Short Term Savings. If significant debt exists, then the objective is to reorganize the debt so that payments can be made consistently. If spending patterns exceed income then a change to these expenses and/or financial behaviour will be necessary. The objective is to create positive cash flow and debt reduction over a six month period. Then the process is repeated and new goals are set.
Stage Two is referred to as “Long Term Budgeting.” This stage does not necessarily begin when all debt from stage one is eliminated. And in many cases some of the expenses associated with Insurance Costs and others items in this group may need to be included in the Critical Budget. But many should be deferred if the rate of return that can be reasonably expected is much lower than the interest costs on various obligations.
Let’s get started. Contact a Hamilton Financial Planner today. We will show you:
HOW to create positive cash flow
WHAT next steps are needed for your unique situation, and
WHEN to implement new tactics or strategies.