Let’s suppose you have already promoted yourself to your own CFO, and have been completing month after month your cash flow statement. Now it is time to put all that effort into even better use and improve your financial reality.
How to find ways to improve cash flow?
Essentially, cash flow can be enhanced in 2 ways- by reducing expenses or increasing income. While each of our lives is completely different, these tips can give you the inspiration to look for and find options to improve your cash flow.
Improving your cash flow does not mean a lifestyle change — it means that you will live with as much joy as before, plus some extra cash in your pocket.
Negotiate a salary raise
A salary increase might be the easiest, quickest and most sustainable way to improve your long term cash flow. Basically, it implies that you would improve your cash flow while pretty much the same thing as before.
However, most employees still do not prefer to take this option. A 2016 survey by Payscale has revealed that over 50% of employees do not ever ask for a raise during their career track. The problem is, you will barely ever get a salary raise if you do not ask for one. So take your courage, assess your true market value, put together compelling arguments and ask for a raise.
Similarly for freelancers and solo-preneurs: raise your rate. Focus on the services which bring you the highest income and increase your prices. If it makes you feel uncomfortable to do raise your rate all at once, try doing it incrementally by raising 5–10% on a regular basis.
Find alternative revenue streams
The gig economy has opened the doors to a myriad of ways to earn extra income. Do you have a spare bedroom to rent? Love to write stories? Or can you give accounting advice?
All of these things can earn you something extra above your regular income. Look at the things that you have and love doing in your free time and ask yourself- is there any way I could earn money while doing this?
For example, enthusiastic home cooks in Italy can sign up to the Le Cesarine application and attract travelers to enjoy a home-cooked meal at their home. The hosts are happy to cook, get to know new cultures and earn a couple of extra bucks.
We can also look at the Freedom With Writing newsletter, which collects hundreds of paid writing opportunities — not just for professionals. They are often looking for personal stories or specific interests and expertise in a subject, which might just be something you have.
There are plenty of creative possibilities if you want to look for some extra income.
Get better at investments
The best type of income most likely is passive income. The one you do not need to do much for. Passive income can often come for wise investments, which bring regular rewards to you. You can look into better savings options, higher interest, and funds. After all, your money should work more for you, and you did for it!
See the stories of how some everyday people started out by investing in CNBC.
Re-evaluate your daily expenses
Use the cash flow statement to check and evaluate your most common expenses, like groceries, going out, coffee or entertainment. Establish categories that can help you track them. Look carefully through these expenses and try to see if there are alternatives. For example, taking coffee from home in a reusable cup, instead of getting one daily at the chain coffee shop. If you love going to the movies, check for membership options which could give you discounts for more tickets.
Buy smarter
Find options to buy what you do now but spend less! For example, buy in bulk. Bundles, big packages, and promotions can seriously help you to knock off some unnecessary expenses. For example, try buying non-perishable goods, such as washing powder in big quantities when on sale, stock up on rice, or order at wholesale prices.
Check on your long-term expenses
Is your car eating your salary? Is the water bill too high? Occasionally it is great to review your long-term expenses and lifestyles. Rebalancing your mortgage, finding a cheaper utility provider, or switching to a more appropriate phone package can make a lot of difference in the big picture. You can even consider bolder ideas, such as getting an electric scooter instead of your car to reduce everyday costs.
These 6 points are just a start when it comes to improving your cash flow. Get creative with your ideas, see different options, and share with us in the comments what works for you.
