The Hierarchy of Financial Needs
In the world of financial planning, there are different kinds of planning, with different areas of focus and levels of complexity. At Spring, we divide that complexity up into Cash Flow, Comprehensive, and Advanced planning. But here’s a secret:
It always comes down to cash flow
Despite what all the magazines (and frankly, a fair number of financial advisors) will tell you, it’s not the tax or investment or insurance management that trips people up the most. It’s your day-to-day. It’s your housing, your food, your coffee money. It’s your bank statement, and that whole credit card thing. It’s sharing expenses with your spouse. It’s choosing whether or not to pay your kids an allowance. It’s that horrifying word: budget. It’s the way you feel about the choices you make every single day.
We can create some pretty fancy strategies for you that look great in your financial plan but there are some situations where – regardless of how good the advice and strategy is – it doesn’t stick. It’s not that we’re idiots (we have pieces of paper and letters that say we’re not, so we trust them) – and it’s not that you’re an idiot either (we know you, you’re not).
It’s that cash flow management is hard.
Often, the people who have wrestled that demon and overcome it don’t look backwards to recognize the time, thought, and effort it took to create the system that works best for them. They just know that now it’s easy.
Humans are adaptable like that. We think that the thing we know now is a thing we’ve always known – I’m sure that’s why everyone thinks Millennials are terrible. They’re not. They’re young adults and all young adults (all humans) do dumb things. When we think about our young adulthood, we know we didn’t make the best decisions all the time either – but hindsight may make us think that we were somehow completely different from the Millennial generation when we were that age. We weren’t. We just learned from that process and have forgotten how much learning was involved.
It’s the same thing with your money management. Unless some magic system was implemented when you were quite young, it’s likely that you’ve struggled with creating a system that works for you.
Cash flow management is the basis of your overall financial health. There are courses on it for businesses. The businesses that win, the ones that you decide to buy stock in (we hope) are the ones with good cash management. When those wise gurus of business are yelling, “IT’S ALL ABOUT THE PROFIT!” they’re exactly correct. Top line revenue doesn’t mean much. It’s the bottom line – that profit number – that indicates success.
It’s no different for you as an individual.
The great strategies that you can implement through specific vehicles that have some sweet tax bells and investment whistles or even guarantees simply do not work if your cash flow is in crisis. They work reasonably well if your cash flow seems fine.
They work remarkably well if your cash flow is expertly managed.
This means that if you’ve ever:
- Felt stressed about money
- Thought that it’s impossible to get ahead
- Found your expenses rising faster than your income – a key clue is the increase in your credit card/line of credit/loan balances
- Just not knowing where your money went
- Carried a balance on your credit card
- Ran out of cash just as your pay arrived
- Hid any purchases or any debt from your spouse
- Felt shame about your money
…then you would benefit from a deep dive into your cash flow (we didn’t say “budget”).
How Can A Cash Flow Specialist Help?
Money is emotional. When it’s personal money – as opposed to business money – it’s more so. Even the most organized, militant money managers have emotions about money (it’s why they’re organized and militant). Getting into your belief systems about money can help you get out of any ruts you’ve created or were created by the household you grew up in.
From there, you can start to relieve financial stress, get rid of bad habits, and build a system that works for you. We don’t think you need to manage your money the same way as everyone else. We don’t think you desperately need to track your money in and out (even though some of us really, really like doing it ourselves). We think you need something that takes the pressure off.
That way, when those super exciting* tax-efficient strategies come up, you’ll be ready for them – and they’ll work.
*Okay, maybe they’re only super exciting to us. We are kind of nerdy about these things.