Creating a Balanced Flow

Understanding how to manage finances is a life hack every one needs to learn. Your inflow and outflow, If you get that balance wrong, no matter how much you earn, you’ll always end up broke. Get it right, and even with little Income, you’re good to go. The truth is, most people actually don’t have an inflow problem. The real problem is the outflow.

Inflow and Outflow
Let’s break it down.

Inflow is every currency that finds it way into your account. Your salary, your business profits, dividends, side hustles, or even a coin.

Outflow is every single money that leaves your account. Rent, bills, groceries, fuel, subscriptions and online purchases. Outflow, sometimes feels harmless but it sneaks up on you faster than you expect.

When your inflow is greater than your outflow, you’re safe. You have a breathing space. That breathing space becomes your savings, investments, opportunities and eventually financial security. But when outflow is greater than inflow, you’re on a one way road to brokeness. Debt creeps in, stress builds and before you know it, you’re working just to feed from hand to mouth.

Here’s something I’ve noticed, most people think they need to earn more money to solve their problems. Which could be true at some point but the truth remains that, no matter how much you make, if your outflow outweighs your inflow, you’ll always end up broke faster than you can imagine.

You could see someone earning six figures and still be living from paycheck to paycheck. The more they earn, the more they spend. Trying to leave a lifestyle that’s bigger than your pocket. It’s called lifestyle inflation. Instead of growing their savings or investment, they grow their expenses.

On the other hand, they’re people who don’t earn much but always seem to have something saved. You don’t need to have a lot before you start saving or investing. It takes discipline to understand that controlling outflow is more important than increasing inflow.

How do you walk around this;

If you don’t know where your money is going, you’re not in control of it. It’s as simple as that.

Tracking inflow isn’t that complicated, because you know how much you earn. But outflow? That’s where you might find a little challenge. Those “small” unnecessary purchases that turn into habits.

You have to be your own accountant. The best thing you can do is track your spending. I think they’re apps for this now but I like to do it manually. Write down every single thing you spend money on. Don’t leave nothing out. Review it monthly. You’ll probably find that 20-30% of your outflow were very unnecessary. That’s your first step to cut back and redirect those funds into something meaningful.

Once you gain control of your outflow, your next step is your inflow. Because let’s be honest, saving more is great, but there’s a limit to how much you can save.
Growing inflow might mean aiming for a better pay, making smart investments, starting a side hustle and the likes of them. A little increase in your inflow can have an impact on your finances.

To manage your outflow takes a lot of discipline, Outflow grows quietly. That “free trail” that turns into a subscription you forgot to cancel. That trendy item, always eating what you crave for etc.
It’s important to learn how to spend intentionally. The more conscious you are, the more balanced your financial flow becomes.

Just sharing my experiences and observations over the years. You could have your own way of managing your finances and it doesn’t have to be boring.

Money comes and goes. The idea is to guide it in a way that builds stability. It’s not about saving every penny or about spending recklessly. It’s about finding your balance and maintaining it.

If we command our wealth, we will be rich and free. If our wealth commands us, we’re indeed poor.

Edmund Burke

Image source

Posted Using INLEO