In tight times, whether it is a global financial crisis or simply a personal one, people are becoming increasingly aware of the importance of being more careful and aware of their monetary situation.



As with any crisis, there are opportunities for people to come out of it better than they went in. It could be to end up with a better financial management system in place so that they can keep more and better direct the flow of their money. So many people live in financial blindness; they do not know what money is coming in or worse, they do not really know where it is all going. This can create tension, frustration and arguments (including with themselves).

It is vital to know how income is being allocated so the impact of spending can be seen. It is especially interesting to see that impact over a month and a year. People also need to know if they have enough money to cover the things they want and need. Keeping a track of income and expenses can be carried out manually except things can change in a matter of weeks. Adjustments must be made as changes occur. Most people do not want to be doing this manually every time. So, everyone needs a computerized system to do this.

The issue with most software programs is that they only take into account the comings and goings of a year. If, however, someone had a large part of an item coming sooner than the income comes in to cover it, they have a problem. For example, if there was a $1000 left for car expenses over a year but $800 of that needs to come out next week, there may not be enough put aside yet. So cash flow is important to manage personal finances, just as it is in business.

Cash flow is about liquidity (such as money in the bank) to cover expenses as and when they come up. Credit cards and other loans can be used to get over the times when cash flow is short but they should be paid back as soon as possible to minimize extra charges. People must avoid the trap of using them more than needed otherwise they end up spending more than they would otherwise have. It is almost impossible to work out cash flow manually. When it comes to updating when changes occur, a computerized system is imperative, even just to keep your sanity.

When people know what is coming in and where it is going they can have better peace of mind. Even if things are tight or going backwards, at least they know where they are at and can better come up with ways to deal with it.