How to master your cash flow

Money isn’t a complex math problem, it’s a complex behavioral problem.

Some people think money is the root of all evil; for others, that their purpose in life is to accumulate as much money as possible. What role does money play in your life? Are you consumed by the thought of saving pennies and getting the most value out of your hard-earned dollar? Maybe you’re consumed by the cycle of debt and wondering how you will afford rent and food this month because tuition is due, and you got a flat tire on your way to work. Would you rather know where every penny comes from and where it goes, or be blissfully unaware and let the universe control your spending?

Going to college will be a financial education one way or another, even if you don’t choose to study finance. Figuring out how to pay bills on time, manage work/school balance, student loans, and paying for things you enjoy will become a necessity if you don’t want to end up bankrupt. Everybody has a different financial background and attitude regarding money; most of this is learned, but with discipline and research, one can change their beliefs and habits. 

As a financial coach, I won’t tell you how to spend your money. That’s the cool thing, you work hard for your money, so you get to decide how to spend it! When I meet with people as a coach, my goal is to help align your values with your actions. If I asked, “What are your values?” that’s a deep question that you might not be able to fully answer. If I ask, “What do you love to spend money on?” everybody has something that they love to buy. Now think, if you could spend twice as much money on that thing that you love to buy, what would that look like? How much of your money is going to things you love to buy compared to things you couldn’t care less about? To figure this out, you need to track your expenses if you aren’t already doing so. Technology makes it easier than ever to track your expenses, you just need to be mentally aware.

Once you start tracking your expenses, you will see if you have negative or positive cashflow. Simply put, are you making more than you’re spending, or vice versa? If one of your goals is to save a certain amount each month, this will only be possible if you have positive cashflow. The cash flow equation is simple: increase your income or decrease your expenses to increase cash flow. Income can be increased to an extent by getting a better job or asking for a raise, but you have complete control over your expenses. Control over your rent payment, your tuition, your groceries, phone bills, and every other thing you want is a conscious decision you make. The funny thing about wants is they’re unlimited. As our income grows, we want a bigger house, bigger boat, bigger investment accounts, it never ends. Here’s a simple exercise to see what you value more: would you prefer to pay a large amount of rent for a nice apartment and a single pair of shoes, or have a cheap apartment and buy 10 pairs of shoes?

Cash FlowBy dialing in your monthly cash flow, you will be able to afford any goal you set. Running calculations is the easy part; if you only save $5 a week—assuming 2% compound interest—it will take 217.82 years to become a millionaire. That’s the easy part, the hard part is being patient and sticking to your goal. Freeing up any extra room in your cashflow will allow you to actively work towards your goals more aggressively so you can meet your goal as soon as possible.

Setting goals will allow you to do, reach, become, achieve, and attain whatever you want with your life. Money isn’t a complex math problem, it’s a complex behavioral problem. Educating yourself financially will enable you to do anything you would like.


If you have any questions please schedule an appointment with one of the wonderful financial coaches at the UVU Money Management Resource Center.


About the author:

Kaden Collins

Kaden Collins is a financial coach in the MMRC.