Eight steps to improved Cashflow

Imagine feeling on top of your finances. Knowing you’re in a position to enjoy your life today, while also saving for tomorrow. 

If that sounds good to you, you’re not alone. In a recent survey, 54% of Australians aged 55-64 strongly agreed they’d like that too.

Yet, many of us don’t feel like we’re in that position. Financial stress is actually so common that 24% of Australian employees are affected by it.ii And it can have an impact on all areas of life – psychological health, morale and the ability to fulfil day-to-day responsibilities. 
 

A better cashflow could help

Your cashflow is the amount of money that’s coming in and going out of your bank account at any point in time. It’s not a measure of overall wealth, but whether there’s enough cash available to meet your expenses, with some left over. If your cashflow isn’t in check, you might find it difficult to pay your bills on time, or end up relying on credit. 

Also, cashflow is almost always the starting point for building wealth. 

So when it comes to finding ways to enjoy life and still grow your wealth, before you do anything else, it’s worth looking at how you’re spending your everyday money. 

Here’s what you can start doing today to help you feel on top of your finances. 
 

Step one: Set some goals

Work out what you’d like to achieve in life. It’s a good way to help shape how you spend your money in the long term. Also, research suggests that setting goals can help you become happier and more positive as well as eliminate some triggers of financial stress.iii 
 

Step two: Get a better understanding of your spending habits

Take a step back and look at your money coming in and going out. This will help you become clear on where your sticking points are, like the common times you find yourself short. 
 

Step three: Create a workable budget

Build a budget that fits your lifestyle and priorities. There are lots of budgeting tools online, or this is something we can help you with. Once you’ve crunched the numbers, you can then look at areas to make some savings. 
 

Step four: Compare your providers

List your current providers for things like your home loan, bank accounts, credit cards, mobile phone, internet and utilities. Understand the costs, then look around for better deals. Comparing providers can often end up saving you money in the long run. 
 

Step five: Review your insurances

Now is the time to work out whether you have the right type and level of insurances, and how you can make savings. AMP’s insurance calculator can help you figure out how much cover you might need. 
 

Step six: Get on top of your super

It’s important to think about super as soon as possible. Many Australians will be looking at a retirement of 30 years or more, and the Age Pension alone is unlikely to be enough.iv 
 

Step seven: Embrace online services

This is where you can simplify the time it takes to look after your finances so you can get on with the rest of your life. There are a range things you can do:

• Set up direct debits so your bills are paid on time
• Switch to electronic communications (some providers actually charge for paper-based communications)
• Download apps that can help you access your finances on the move
• Check and update your details, so your providers don’t lose track of you
• Set up a good online filing system, and make sure you back it up!

Step eight: Talk to an expert

Asking friends and relatives for advice is great, but what works for one person may not work for someone else. We are here to help you set up your money for growth in the long term, while also helping you meet the needs of today. 
 

Better cashflow, better lifestyle

By taking a fresh look at your cashflow, you’re likely to find new approaches to saving money and time. 

With a clear picture of what’s happening with your money at any point in time, you’ll feel more confident about your finances overall. Able to enjoy life today, while still saving for tomorrow. 
 

We’re here to help

Just give us a call today, and ask us how we can help you improve your cashflow, and build a plan to meet your financial goals. 

If you like, we can also set up regular check-ins, to make sure you continue to head in the right direction. 
 

i The Interpreters. AMP Segmentation and Goals research 2017. 1955 respondents. 

ii Financial wellness report. 2016. prepared by TNS for AMP Life Limited 

iii Positive psychology program, Goal setting can make you a happier person article, Oct 2015 

iv http://www.superannuation.asn.au/resources/retirement-standard 

Nothing Succeeds like Succession Planning

Small business is generally regarded as the backbone of the Australian economy, but that strong back is showing signs of age.

With 30 per cent of all small business owners aged on the wrong side of 55,i it is important to have a succession plan in place.
 

Ideally, succession planning should begin when the business is formed to ensure a smooth transition if and when the need arises. But all too often founders put succession planning in the too-hard basket, leaving themselves open to financial and emotional stress when the decision is thrust upon them. There are a number of reasons why this is the case. Fear of death, reluctance to hand over control, difficulty choosing among children or a refusal to acknowledge the need for planning.
 

Handing over power to a new generation is a tricky process in any corporate environment. Rupert Murdoch, at age 83, has only just anointed elder son Lachlan as his heir apparent after years of playing his children off against one another.
 

A cautionary tale

Large organisations devote significant resources to finding and grooming chief executives and board members, and small businesses can learn from their example. But sometimes even the most successful companies get it wrong.
 

Computer software giant Microsoft recently drew criticism for its handling of the appointment of a chief executive officer to replace Steve Ballmer.

After 14 years at the helm Ballmer announced last August that he was stepping down. The company did not announce a successor immediately, instead signalling it would happen within a year. To make matters worse, at around the same time Microsoft founder Bill Gates announced he would step aside as chairman to make way for an independent non-executive chairman.

This created a leadership vacuum and wild speculation in the press about likely external candidates. The company also gave conflicting signals about its future direction. It took five months to appoint Satya Nadella as CEO. Given that he had been with the company for 21 years observers wondered why the succession had not been organised earlier.

Canvass your options

Many small business owners hope to keep it in the family by handing the baton to the next generation. That is an option but it is not necessarily the best one.

Appoint a family member
 

Handing control to an adult child or another family member does have many advantages provided the chosen individual is qualified and willing to accept the role. But that is not always the case.

On the positive side, it ensures the founder’s vision for the business has a good chance of outliving them, they can maintain some influence over the company after they retire and have the satisfaction of knowing that their life’s work has been of benefit for future generations.

Appoint a manager
 

If there are no suitable candidates within the family, an outsider can be appointed. This might be an individual already employed in the business or an external manager. Sometimes a temporary professional manager is appointed to bridge the gap and perhaps mentor a family member until the are ready for the role.

The most important issue for family businesses turning to an outsider is trust. The family must be confident that the company, and their interests, will be in safe hands?

Sell as a going concern
 

Sometimes the best option for an owner is to sell the business and move on to new challenges or retirement. Options include a trade sale, stock market flotation or a management buy-out.
 

With a stock market float the founder can retain equity and cash in some of the value they have built in the company while raising capital to fund future growth.

A management buy-out is a compromise solution to ensure continuity of the business without having to sell on the open market.

Liquidate
 

The least palatable option is to sell off the company’s assets, settle all outstanding debts and close the business. This is generally seen as the last resort because it can be costly and is unlikely to raise as much money as the sale of the business as a going concern. There may also be an emotional cost in having to let loyal employees go.

Do nothing

Burying your head in the sand is the default option and unfortunately it is all too common. By the time the founder is no longer able to run the business, or the business has struggled for many years, a fire sale may be the only option left. And unfortunately, that is the least profitable outcome.
 

Succession planning begins with owners and managers incorporating succession planning into their business plan from the outset. Your adviser can help you initiate discussions about succession planning for your business and ensure you are prepared for the future.

"This website contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information"