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Increase your personal cash flow and wealth

Guest post by: Roy Derrick

Article Overview: During this current economic downturn more and more of us are trying to increase our cash flow in order to pay our ever increasing bills. Below is an article which offers helpful advice on how to increase our wealth both financially and within our lifestyle.

Increase your personal cash flow and wealth

Personal cash flow, put really simply is the difference between the money that comes in and the money that goes out each week, each month or each year. Because many people are salaried, there is a tendency to think of personal cash flow in monthly terms, but for people running their own businesses their finances might be a bit more erratic and require an annual view to make real sense.

Wealth, according to the Oxford English dictionary is defined as "an abundance of valuable possessions or money; a plentiful supply of a particular desirable thing or well-being". Although these definitions are pretty much all-encompassing, in day-to-day life we often mistake the meaning of wealth to mean being rich. During the first decade of the 21^st century, more and more people are rejecting the notion of wealth being something you wear on your sleeve, something to flaunt or flash to make friends envious. Wealth, during this decade has taken the form of being able to make choices; having time; having flexibility; getting back to nature; enjoying simple things.

So how can you increase your personal cash flow and wealth? Put bluntly, there are only two ways to increase personal cash flow. The first is by increasing the amount of money that comes in each week, each month or each year and the second is by reducing your outgoings. On the assumption that most people who are serious about increasing their personal cash flow have already done what they can to get their outgoings as low as possible, we're going to look at 3 ways to increase the amount of money that comes in.

1. Get a pay rise. One sure-fire way of improving your personal cash flow is to ask for a pay rise. Many salaried people feel under paid and under valued and can see no end of reasons why they deserve a pay rise. In a booming economy, this can be quite a feasible way of improving your personal cash flow. That said, in the current economic downturn (which looks pretty much set to continue), the majority of employers are not open to the idea of paying their staff more. They know that there are any number of people chasing each of their positions, many of whom will accept lower pay and conditions than existing staff, so why would they pay more (except of course in exceptional circumstances)? Furthermore, the workplace culture at the present moment is not one where most people would feel comfortable asking for a pay rise on the basis that they are thanking their lucky stars to still have a job!
2. Win the lottery. This option is of course a bit 'tongue in cheek'! Winning the lottery is the solution we all dream of to improve our personal cash flow, but for the majority, that's all it'll ever be...a dream.
3. Set up your own business. In the current climate of employment uncertainty and redundancy, there's no end of reasons to stress about job security. Even people who thought they had a job for life are finding that their services have become dispensable. It is for these reasons that more and more people are opting for the flexibility offered by a home based business. Although leaving what you had always thought of as a secure job and setting up office at home may seem frivolous, there are numerous advantages of this way of working. Even if you don't opt for a full-time change, it may well be that setting up a home based business that fits in with your work schedule might be the perfect way to increase your personal cash flow.

So what about increasing your financial wealth? No matter whether you measure wealth in financial, emotional or lifestyle terms, setting up a business may also be the answer to increasing your personal wealth. Setting up a business is a great way to start building a valuable asset, but as we've said, true wealth is, for many people, having the lifestyle you want and the lifestyle you need to allow you to get the most from your time on this earth.

It's for these reasons that more people are finding financial freedom, prosperity and wealth by either giving up the daily 9 to 5 (by being pushed or by jumping) or enhancing their 9 to 5 earnings with a self-employed element. By choosing a home based business they can let their inner light shine through; they can find true fulfilment and increase their personal cash flow and wealth. It's not for everyone, but it might just be for what you're looking for!

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Article Tags: building a valuable asset, choosing a home based business, flexibility offered by a home based business, increase your personal cash flow and wealth, increasing your financial wealth, job for life, meaning of wealth, secure job, set up your own business, setting up an office at home, true wealth



Related Forum Posts
Tax returns! - Well, this is new on me. i had no idea you could sell a site off. If it's anything like purchasing a non-internet business then you need to check into multiple things. Will you need to finance to purchase? If so, you'll need to calculate the cash flow. Also, find out if there will be any add backs to the cash flow, for example, are there other workers invovled to keep the site running...perhaps workers you won't need when you take the site over? Their salaries can be added back to the cash flow if you will not need them. You must see the top page of the last year tax return (never go off just the P & L's). Did the seller run anything personal thru the tax returns that you wont? That's also considered an add back to the cash flow. What is the gross sales for the 12 months? What is the net income for the 12 months? Make sure the purchase price is justified. You can calculate a ball park range on this by doing 30 - 50% of the gross sales for the year or 3- 5 times the net earnings. What is the web traffic like? Is it steady? Do you have time to run the site or will you need to hire someone to manage it? Make sure the business is supporting itself and is profitable. Does the seller have an initial business plan from when they bagan the business, so you can look it over?
Topics of Interest - There have been some wonderful resources posted in this section. However, I also strongly advise any entreperneur to pick up a few books on personal financial planning; cash flow is key to any business and the best way to start planning good cash flow for your business is to learn some personal financial planning. I have always enjoyed the following: The Millionaire Next Door- Thomas Stanley and William D. Danko Richest Man in Babylon- George S. Clason Rich Dad, Poor Dad- Robert T. Kiyoski and Sharon L. Lichter There are many many more great resources on this topic. These should be read in conjunction with the other resources posted here. Good luck.
Re: Improving Cash Flow - Hi aquinm78, Those are 10 excellent tips you shared for businesses to reduce debt and increase cash flow. Thanks for the detailed post as I'm sure many of us can put these to good use for both our business and personal lives. Take Care, Alan
Re: Interrealtionship between financial statements - Yes, it’s necessary to take a complete toll of account transactions. If you don’t, then how would you be able to track your financial figures? For example, If a person sold goods for USD 5,000.00, half in cash and half in credit, then with taken impact of all three i.e. cash flow by USD 2,500.00 balance sheet through both cash and receivable and income/P&L statement by USD 5,0000.00, the transaction will not be complete.
Re: Service Or Product? - I usually recommend starting with a service to get close to your customers, bring in cash flow, and keep your overhead low. Step 1 of entrepreneurship is getting past survival and being able to pay your bills without taking a job. A service is a great way to get you started and really get to know your customers and their problems. But it's a lot harder to scale a service business so if you really want to grow you can then focus on the product side of things. You have cash flow from the service business and a keen understanding of the pain in your market as well as a history of successful clients who have worked with you and can provide valuable testimonials.


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