Your Money as a Fountain
One of my family’s favorite daytrips is going to Longwood Gardens near Kennett Square, Pennsylvania. Originally an estate of Pierre S. du Pont, Longwood Gardens is now an expansive public garden featuring some of the world’s most beautiful and unique flowers and plants. People travel far and wide to tour the gardens and we’re fortunate to have it within driving distance. While nothing there can compare with the grandeur of the flowers and plants, the settings are impressive in their own right.
One especially spectacular scene is the Main Fountain Garden. The fountains boast of 1,719 jets and can shoot water up to 175 feet. What you see is incredible, but it’s what you can’t see that makes these fountains possible. Underneath the fountains lie 1,400 feet of tunnels organizing and controlling more than 338,000 gallons of water. Without this design and structure the fountains wouldn’t be anywhere near as magnificent.
I’d like you to envision your money as water. Money flows from your income through any giving, savings, investing, and spending you do. To better guide and direct your money you can use a Cash Flow. By making your money more efficient you’ll likely achieve things you otherwise couldn’t.
What a Cash Flow Can Do For You
A Cash Flow can give you greater financial freedom. Instead of guessing at your financial situation you’ll be in control of it. Yes, you’ll know your limitations, but you’ll also be able to make necessary changes. This too can help limit financial stress and help you avoid unnecessary financial difficulties.
Why a Cash Flow instead of a budget or spending plan? Too often people view a budget as a ledger of past expenses which isn’t very helpful. A spending plan typically focuses on the present and ignores future needs and desires of saving, investing, and giving.
“Too often people view a budget as a ledger of past expenses which isn't very helpful.”
What a Cash Flow Can Do For You
A Cash Flow can give you greater financial freedom. Instead of guessing at your financial situation you’ll be in control of it. Yes, you’ll know your limitations, but you’ll also be able to make necessary changes. This too can help limit financial stress and help you avoid unnecessary financial difficulties.
Why a Cash Flow instead of a budget or spending plan? Too often people view a budget as a ledger of past expenses which isn’t very helpful. A spending plan typically focuses on the present and ignores future needs and desires of saving, investing, and giving.
A Cash Flow looks forward not backward. It’s not looking backwards to see where your money went. It’s looking forward and managing where your money goes for today and for the future. A Cash Flow gives you the necessary design and structure. After all, without boundaries 338,000 gallons of water would create a swamp. The design, pipes, and power make it a fountain.
How to Create a Cash Flow
So how do you create a Cash Flow? The good news is it doesn’t have to be as complex as the Longwood Gardens Main Fountain. Here are some easy steps you can take to create your own Cash Flow:
- Know your income. Write down any expected income for the upcoming month. You can use your monthly income after taxes or the amount that reaches your bank account. If you choose to start from your income before taxes are taken out make sure to subtract the taxes and deductions from your payroll.
- Channel your cash. List out your planned giving, savings, investing, and expenses for the upcoming month. The categories should be specific enough to know where the money is going but broad enough so you’re not wasting time with unhelpful minutia. Automate what you can. If you set up automatic withdrawals from your bank account to regularly invest or pay your bills you still need to be aware of where your money goes, but the more you can automate the easier it can be to manage.
- Monitor and adjust. A good Cash Flow should be both flexible and fixed. It should be flexible enough so you can make necessary adjustments when a category’s amount goes above or below the planned amount and fixed enough so there aren’t any cracks or leaks. At the end of the month you want your Income minus any Giving, Savings, Investments, and Spending to equal zero. Money is fluid. Like water, money will find any cracks or leaks it can. The more you monitor your Cash Flow and make necessary adjustments the more efficient your money will be.
Your money is already flowing somewhere, you just may not know exactly where yet. The sooner you begin to guide and direct your Cash Flow the more it will begin working for you and the results could be spectacular.
Managing your money well has an impact. After decades of studying and researching the habits of wealth people, Dr. Thomas J. Stanley and Dr. Sarah Fallaw found that those who have greater potential to build wealth actively managed their Cash Flow or budget. If you’d like to assess your own potential for building wealth you can take a brief questionnaire based on their extensive research on the wealthy and their psychographics here. While every study can has limitations, it can be a helpful starting point to see how your beliefs, attitudes, and habits could affect your potential for building wealth.
If you’d like to learn more about how I serve families like yours you can schedule a time for us to talk here.
How are your beliefs, attitudes, and habits impacting your potential for building wealth?