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What is budgeting and cash flow management 

Budgeting is an investment tool as by acknowledging surplus income it gives you the power to invest. Cash flow management is an estimate of all cash income and cash expenses that are EXPECTED to occur during a period of time; monthly, quarterly or annually. Cash flow management is the step prior to budgeting. You need to be aware of your cash flow in order to set a budget. Spend less than you earn and you’ll have a surplus, spend more and you’ll increase your debt. The quiet achievers of net wealth involve surplus income, compounding interest/investments and time.

Key cash flow management strategies

Managing cash flow is one of the simplest and most effective ways of accruing wealth and everyone can do it. You need to establish a budget, or at the very least, establish spending boundaries, in order to be able to save and invest for the future.

Working out forward projections of cash flow and putting a strategy in place for surplus cash flow, ensures that you are maximising your earnings. A budget allows you to look at the things you need versus the things you simply like to have or want. If you need to trim, trim wants BUT not entirely, as that is unrealistic.

A modest daily purchase for a ‘two a day’ coffee habit could cost nearly $3000 (2x$4×365). If $3000 is invested each year instead over 20 years, assuming an earnings rate of 5%, the compounding effect would see you with extra savings of $103,778.  ASIC have a moneysmart website at www.moneysmart.gov.au which has some useful calculators.

How hudson can support you to achieving you budgeting goals 

Hudson can help you maximise your financial results by running different scenarios of your cash flow management through our sophisticated software. This shows us the different results certain savings/investments may make you, and the difference in saving $5000 a year as opposed to $20000 a year, and many other scenarios. This is offered as part of a financial plan that Hudson call the Path Ahead. The Path Ahead will match your strategy to your lifestyle goals and objectives, as well as working within your risk profile.

The main benefit of having a financial adviser at Hudson is that we will keep you accountable and keep you yon track when you find the path hard to stay on.

Benefits of the having the budgeting and cash flow management strategy 

By being aware of income versus expenditure, needs versus wants, and trying to obtain this with the 50/30/20 (50% needs, 30% wants, 20% financial goals) will set you on the path to wherever it is that you want to be to enjoy your non-working years. Some people don’t budget, per say, but they do a forward projection of income, work out surplus income, establish a figure to ‘pay themselves first’ each month (this figure is used for investing in their future) and they then spend 80% on living. This is good for people who feel unhappy and restrained with a budget, but still allows them to provide for their future.

The right financial strategy should allow you to still enjoy some of the things you love now, while balancing your need and wants for the future.

Step by Step Process for Budgeting & Cash Flow

The Hudson step by step budgeting & cash flow process is simple;

Step 1: Reach out to one of Hudson’s wealth advisers by calling 1800804296 and booking your obligation free consultation through our client operations manager, Matt Paul.

Step 2: A Hudson Advisor will set up an initial meeting to discuss ways in which Hudson may be able to help you get to whatever you determine wealthy to be.

Step 3: Once we have discussed ways in which we may be able to help, we will discuss plan fees or product fees, depending on the complexity of the situation, and we will discuss ongoing options and outline any fees that may be involved going forward. This transparency will then allow us to move on and focus on establishing an investment strategy that works with your risk profile, your lifestyle needs and your future financial goals.

Step 4: We will then present this strategy to you, if necessary make any changes, and then implement it. Once it is implemented we will move to have quarterly, bi annual, or annual reviews, depending on what we have incorporated into your plan, but we are always here and available if things change in the meantime and adjustments to your plan need to be made. We will keep you accountable and will help ensure that you stay on the path we have mapped for you. You can not underestimate this sort of support as investing decisions are directly linked to emotions and an adviser can help to keep emotions out of it and this can be lifechanging for some.

FAQs for Budgeting & Cash Flow

Discover our most commonly asked questions relating to budgeting & cash flow at Hudson.

What is budgeting?

Budgeting is a plan for your income, whether it be a monthly, quarterly or annually. Budgeting is the first step to providing for your financial future and one of the simplest and most effective ways of increasing your wealth. Surplus income is needed for any savings plan or investment, so a budget is absolutely necessary in all financial plans. There are many ways to budget and it helps to have an adviser work with you in order to work out the best way to budget to match your personality traits. Investing decisions are directly linked to emotions and this is especially true when it comes to how restricting a budget is for different people.

What is cash flow management?

Cash flow management goes hand in hand with budgeting. Its important to know what cash flow you have coming in in the future in order to be able to budget. However, cash flow management also starts with a budget, and evolves into a strategy for the best use of surplus cash flow.

Do financial advisers help with budgeting?

Your financial adviser can look at your income versus expenses, and as part of a comprehensive plan, this is an important feature as your surplus income is the foundation of any financial plan. Your financial adviser is also there to make you accountable and to keep you on track with your budgeting and investment goals.

How to build cash flow?

Increase income, reduce expenses and reduce taxes where possible

What are ways to calculate cash flow?

There are some great budgeting apps available now and ASIC have a moneysmart website which offers some great tools.

Why is budgeting and cash flow important?

Budgeting and cash flow management is the basis of all financial plans, without freeing up some income, there is no way to get ahead with your financial goals.

Is there a difference between cash flow and budgets?

Cash flow is a forward projection, budget is an actual analysis that looks backwards

Contact Hudson for Cash flow and budgeting Advice today

The right cash flow management strategy is an integral part to your overarching financial strategy. 

Consider working with Hudson Financial Planning as your adviser to secure your long-term financial future in Brisbane and Australia.

If you wish to discuss the current status of your cash flow and budgeting plan or create an entirely new plan, please book an appointment with your Hudson adviser first to discuss your options by calling 1800 804 296 or enquire online with us today.