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How To Be Proactive About Your Cash Flow In Order To Create Margin Thumbnail

How To Be Proactive About Your Cash Flow In Order To Create Margin

Welcome back to Financial Literacy month! The secret to a strong financial plan is cash flow, so I’ve dedicated this month to teach you not only how to determine and plan for your cash flow, but how to optimize it in order to create margin. Last week we talked about the importance of identifying your current cash flow and the step-by-step process for how to do it.

Today, we are going to take our eyes off of the present and look to the future. Where do you want to be 10 years from now? What kind of lifestyle do you want in retirement? When you look at your current cash flow, is it going to be able to get you where you want to go?

Having a proactive budget is the key to taking control of your financial house. In fact, it’s nearly impossible to do so without one. You need to have a plan that stretches you towards your goals but is actually achievable. Your financial goals will take money, which means you need to create margin in your budget now in order to have the money to accomplish them in the future. The more margin you can create the better.

If your expenses are higher than your income on an ongoing basis, then it is imperative that you take the time to identify ways to immediately reduce your expenses so that you’re balanced. It’s critical that you get to a place where you are building margin each month.  If you don’t, it means you’ll go deeper and deeper into debt over time.

How To Determine Your Future-Focused Budget

The next step in gaining control over your financial life through managing cash flow is to develop a budget that will allow you to achieve both your short-and long-term goals. First, take the spreadsheet you developed with your current spending broken down by category. Now, go through category by category and ascribe a new target amount for each line item in your budget.

This isn’t as easy as it sounds, so here are some tips that will help you:

Get in the Right Mindset

Do whatever you need to do to be comfortable, relaxed, and focused. Hire a babysitter, go to a coffee shop, or tidy the house first. Eliminate all the outer distractions.


Consider what matters most to you. You don’t need to guilt yourself about an expensive gym membership if it’s something that gets used and brings you happiness. If this is a family budget then communicate these to your partner and talk about them.

Open Up

If you are going through this with a spouse then communicate about each category with an open hand and an open mind. It can be hard to open up to scrutiny but remember that you are doing this together with a united goal – a healthy financial future for your family. It’s OK to jointly judge your tactics, but don’t allow yourselves to judge each other’s motivation and intentions. You are in it together.

Focus on What You Can Control

You most likely can’t eliminate a burdensome debt payment overnight. Focus on areas where you can challenge yourself to cut back.

Make It Challenging but Attainable

Push yourself. You might be surprised at how much are able to save each month after a few sacrifices and adding attention to your spending. One sign you’ve found a good balance is when you are feeling both uncomfortable and motivated at the same time.


Invite God to be part of this conversation with. Ask for courage if this feels daunting. Ask for guidance if this feels confusing. Ask for clear communication and a pure heart if you know the conversation will be difficult. As Christians, we serve a God who wants to walk with us in every aspect of our life. Allowing the Spirit to move and lead the process will help us honor God with the resources he’s entrusted us to manage.

Back to the LaFleurs

Last week I introduced the LaFleur family. You can see the breakdown of their current monthly expenses in last week’s article.

After going through this process, they reduced their budgeted monthly expenses by $450! They’ve more than doubled their margin to a total of $850 each month. That’s well over 10% of their take-home pay.

Stick around and I’ll show you how they did it and how this changes their financial outlook for the better. Over the next two weeks, I’ll also share other cost-saving ideas that will help you find margin the way the LaFleurs did.

How To Stay On Track With Your Budget

You’ve made a plan, now it’s time to work the plan. It is also time to set aside any preconceived beliefs you may have about following a budget. Trust me, this isn’t impossible. It really isn’t even all that hard. All it takes is some time, discipline, and desire.

Here are a few tips to help keep you going:

Automate “Past” Spending

Because your past spending is all fixed, you should be able to schedule most, if not all, of these expenses to be paid automatically every month.  As long as you’ve accounted for them in your budget, I’m a big fan of automating these payments to make sure you don’t forget to pay them and to simplify your life.

Track Monthly Budgets for “Current” Spending

One mistake many people make is that they have one big budget encompassing all of their spending each month in one place.  While this can work for some, I find that for most people this becomes overwhelming. They end up not tracking their budget at all.  

Instead of tracking all spending throughout the month, I recommend only tracking your “current” spending categories and being laser focused on these.  The reason: these are the expenses that you can actually control over the course of a month. What this allows you to do is focus on 4-5 categories throughout the month rather than 20+, which I find leads to a lot more success.

Setup Multiple Savings Accounts for “Future” Spending

Rather than have one big account that is used to fund all future expenses, I recommend opening a separate saving account for each of your different “future” spending categories.  While this can seem like a lot at first, in my experience, those who use this strategy have a lot of peace of mind because they know exactly what every dollar of their savings is intended for. Ally Bank and Capital One 360 are my two favorites for this.

Once you have the accounts open, set up automatic transfers into each of these accounts each month. Automate things just like you did for past expenses. Then, only withdraw money from these accounts when you’ve met your goal and are ready.  

For example, let’s say that you want to go on a $3,000 vacation a year from now. I recommend setting up a separate savings account titled VACATION. Set up an automatic monthly transfer of $250 to this account. By doing this, you’ll have $3,000 (plus earned interest) in your account a year from now when it’s time to flee the winter. Trust me, you’ll enjoy your trip that much more knowing that there is a healthy stash of money set aside for the vacation – and only for the vacation!

Let Technology Help You

There are countless web-based programs and apps available for budgeting. I mentioned mint.com last week for the purpose of constructing a budget. Mint will also then track all of your purchases in real-time and update your budget on an easy to read dashboard. Find a program that is reputable, secure, and that works for you.  A few others to consider are You Need a Budget (YNAB) and Every Dollar.

Build in Accountability

If this is a family budget then make space on your calendar each week to check in with your spouse about your budget. Update your expenses for the week, talk about upcoming purchases, and make a plan to stay within your budget.

I encourage everyone to consider telling their closest friends and/or small group about updating your budget. Not only can they hold you accountable, but you might also inspire them to revisit their own budget.

Make a Shopping List

Statistics show that going to the grocery store without a shopping list leads to overspending followed by wasted food. Instead, look for coupons and sales, plan your meals, and make a shopping list so that you’re only buying what you need. You’ll be surprised how much you can save.

Additionally, check out my previous post about shopping at Aldi to cut your grocery bill substantially. I’ll have more tips like this in the last part of this series.

Stay With It

Don’t get discouraged if it takes some time to find a rhythm. If you go over budget the first month, then take some time to understand why. Don’t jump to making any adjustments to your budget. Stay with it for a while and work hard to build new habits.

Creating and following a budget can be likened to working out at the gym. We inherently know that it’s good for us. Most of us want to work out regularly. Many of us even have a pretty good idea of what it takes to get in shape. However, how easy it is for the best intentions to fall flat without some guidance and accountability? Those that bring in a fitness trainer as their partner are getting guidance, the right exercises to do, and accountability. This yields results.

This is what Wacek Financial Planning can bring to you and your family finances. My hope with this series is to inspire my readers to focus on the things they can control in order to build a stronger financial future for themselves. My passion is to help my clients discover how much they can in fact control when it comes to their personal wealth; then show how this leads to a brighter and more generous financial future. I work with individuals and families around the country and find joy in their success. I am here to help you, too. The first call is always free.

About Guide Financial Planning (formerly Wacek Financial Planning)

Guide Financial Planning (formerly Wacek Financial Planning) is led by founder Ben Wacek, who is a Christian fee-only Certified Financial Planner™ and Certified Kingdom Advisor®. He has a passion to help people of all income levels make wise financial decisions and steward their resources from an eternal perspective using Biblical principles. Based in Minneapolis, MN, he works with clients both locally and virtually throughout the country and abroad. You can follow the links to learn more about Guide Financial Planning and our team and the services we offer.