Personal Finance - Four Simple Steps to Manage Cash and Build Wealth Today

Early attention to any overspending and running out of money provides a great opportunity to correct and prevent these habits from causing a serious expansion of personal debt and development of other financial problems.

Correcting your overspending as well as encouraging your wealth building need not be as difficult as many are led to believe. Some of the solicited or unsolicited advice that you receive maybe good, but may not be the right information to help you replace poor financial habits.

I recommend four simple steps to begin increasing your personal cash flow and set the stage for building your personal wealth.

1. Freeze your spending at the current level

Look at your monthly spending totals over the past three months, and calculate your average monthly spending level. By accepting your current spending level, you are minimizing or negating a sense of loss, perceived restriction, or loss of choice which can be counterproductive in your quest to control your finances. An interesting benefit will undoubtedly occurred as you review your expenses in that some expenditures clearly will be identified as unnecessary and can be eliminated or reduced immediately.

  the amount of income that will support your current spending

By applying a ceiling to your spending, you are placed in a responsible role of supporting that spending level by conducting activities that will increase cash flow in your direction to build personal wealth. You can make a conservative estimate of your projected income amount by dividing your gross income  . The most liberal estimate of the projected income is a calculation using your disposable income (net income) instead.

The difference between your new projected income amount and your current income is the additional amount of money needed to support your now desired spending level and to immediately eliminate your noted overspending and running out of money.

  an action plan to increase income to the new amount

Now that you know the additional money that is needed to maintain your current spending level, you can engage and focus on your creative and innovative talents to generate the additional income. This effort may have multiple options such as a promotion, job change, part-time work, starting a business, and so on. An immediate source of money is surprisingly within many homes such as things that you can sell, make, fix, or items to return. Do not hesitate to offer a service to sell items for your neighbor for immediate cash.

  any overage or surplus of cash equally to three separate accounts

Do not be surprise if you generate a surplus when you take action. If so, begin by depositing the amount in three separate accounts named Pay Your Self First, Contributions, and Reserve. A recommended amount is 10% more or less into each account.

Immediate attention to these signs will allow you to gain control of your personal finances and help you to get an early start toward building personal wealth. 



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