4/12/2024 0 Comments Family cashflow![]() Sitting on a board or managing a department and not reviewing your cash flow carefully is a breach of fiduciary duty. In whatever realm you control, whether it is a nonprofit, corporation, governmental agency or your own household, insist on a detailed review of your cash flow. On the withholding of Social Security (12.4%) and Medicare (1.45%) from our paychecks alone, we should all be retiring millionaires. It only takes saving and investing $100 a month from age 20 to 65 to reach a million dollars at retirement. For a family of four at the poverty level, this would mean saving $300 a month. No one should be proud of consuming every dime of income.Īlmost every American family can save 15% of their income and would benefit from this practice. Some families see themselves as simple folk, proud not to have any savings, but that is an incredibly impoverishing mindset. ![]() Sometimes the cost of impulse purchases is the failure to meet long-term financial goals. In economics, the cost of an activity is the highest valued opportunity forgone. Determine from your records what income you believe is dependable and guaranteed, and set your savings and budget based on that. To manage your cash flow wisely even when your income is inconsistent, strive to smooth your standard of living. Then you can determine what your monthly income has been historically even if it is not consistently paid to you.Īrtists, real estate agents, independent contractors and other similar professionals often find it challenging to determine their income because of variable and erratic payments. If you're new to analyzing your cash flow, tax returns fortunately require you to calculate your income annually. If a low-income profession equates to a rewarding life, then live that life. Negotiate a better rate, downsize the plan or cut the expense entirely. Cutting out costly automated expenses-like your cable and Internet bills, phone plan and car payments-is a great beginning. But with a simple life and few expenses outside of basic needs, you could manage just fine. The low income of a struggling poet is likely well below the poverty line. Choose the goal of living a fulfilled life rather than the highest income. A budget is your chance to cut deadweight loss out of your life. This expense is almost entirely a deadweight loss that would be completely avoidable if Congress made and stuck to a budget in line with our values. Yet every year the federal government spends at least that amount via the Bureau of Indian Affairs. Most Americans would not spend $8 million promoting self-sufficiency in Native Americans. A similar loss occurs when people spend without or outside of a budget. At Christmastime economists call it a deadweight loss when gift givers pay more than the recipient of the gift would have paid. Going into debt by purchasing items you didn't want as much as the price you paid for them is a common financial mistake. If like the federal government you don't stick with the budget, you are just as bad off as if you didn't have a budget in the first place. Without a budget, either every purchase is a chore or you're vulnerable to excessive spending. This is particularly sad because budgets are how we allocate our income to the things we value. Many families don't know what their income is, few keep a budget and even fewer know how much they spend in a year. Although the corporate world handles the idea of cash flow fairly well, both the federal government and most households sorely lack this knowledge.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |