cash flow management is important to any successful business. at face value, it's a simple concept. you track how much money is coming in and out of your business (household). cash flow is one of the many factors financial analysts look at when comparing companies and their respective stock values. being cash flow positive (turning a profit), and having a healthy level of liquidity, both show good decision making by management and the ability to get through rough times.
does your household turn a profit?
start by logging into your online banking, select the last three months statements and run the averages. is your business in the red or black ? do you carry money over to the next month consistently, or does it feel like you're stuck on a wheel? this process works for all income levels--what you spend your money on is a moot discussion, everyone has their thing. focus on the numbers, are you profitable?
does your household have cash liquidity?
you and your family are unique but do you have cash saved? we all have different needs, wants, and ideals of what's important within our households. however, successful businesses can pass a stress test in the event of financial hardship. how long can your household survive without your current income? if life can manage four-six months, you're headed in the right direction. if not, you now have somewhere to put your profits--personal savings.
disclosure: the ideas, thoughts, and opinions in this article are our own, except where sources are specifically cited, and are property of millennial financial planning. this article is intended for informational purposes only, and does not serve as direct financial advice. speak with your financial professional for direct advice and guidance. all investments contain risk and the potential loss of principal.
“your family business is going to be unique”