Part Two: Know your cash flow
Understanding your cash flow is the next critical step in bringing clarity to your family’s financial lives. While it may seem basic, we’ve found that many families don’t have a handle on their household spending.
When it comes to spending, knowledge is power not just for you, but for your entire family. When you understand how much you spend now and what you may likely spend in the future, you can set realistic goals for savings and make more intentional financial choices. Your spending and savings habits ultimately form the foundation for long-term financial independence.
The good news is that mapping out your spending should take only 10 to 15 minutes. Focus on these key areas:
- Your average monthly credit card bill
- Fixed or semi-fixed costs not captured above (mortgage, rent, property taxes, education expenses, memberships, etc.)
- One-time or irregular expenses (vacations, large purchases, etc.)
- A general “gross-up” buffer (catch-all category for anything else)
This simple exercise will empower you and your family to make more informed, confident financial decisions for years to come.