Optimising your cash flow: An introduction

You’ve just received your pay, credited into your bank account on or about the same day every month without fail. You probably already have a good idea of where that money will go.

A portion of your regular essential monthly payments will be automatically deducted from this hard-earned money directly via a bank transfer. These payments might include your utility bills, fees for the pre-school that your 4-year-old attends, insurance premiums, payments to your local tax authority, or the $235 monthly allowance you give to your other child.

Another portion of it will go to monthly credit card bill payments, deducted automatically from your bank account on the 3rd of every month. This would cover expenses such as your online news subscription, weekly groceries at the supermarket, and the monthly subscription to your favourite MMORPG.

Then there are payments you make in cash withdrawn from your bank account. This could be for your daily fix of coffee from that vending machine strategically located in your office pantry, to the vegetables and fruits seller at the wet market near your home, or to that busker you passed by on the way to work yesterday morning, who happened to be playing your favourite song at the right place and right time.

You remain contently reassured by the fact that the balance in your bank account at the end of the month will be more than it was at the end of last month by $568.21 (assuming it’s not a bonus or commissions-paying month). At some point, you wonder whether that’s enough, and whether, ultimately, you could have spent less, or used that money to earn more (without too much risk).

This series explores many ways that you can do just that. I make an effort to generalise the approaches, as I believe that they exist in one form or another in the jurisdiction where you reside. That said, I will need to refer to specific examples, which will come mostly from the local context of Singapore.

Topics that will be covered

I intend to cover the following topics in this series. As the articles become available, the items below will have activated links. If the links are not activated, stay tuned! I will get there eventually. :)

• Quick Financial Ratios: Ratios for the individual that encourage rationing.
• Superannuation: The tomorrow worth saving for is (much) nearer than you think.
• More or Less: Sometimes less is more; at other times, more is clearly less.
• Detåx: Taxes don’t have to be so taxing.
• Balancing Act: The opportunity cost of everything is not everything else.
• Not so Loan-ly: Facts about loans that would interest you.
• Rendering Rewards: When paying others pays yourself.
• From Money to Money: Mercilessly reaping the benefits of your entitlements.

For maximum benefit …

To make the best use of this series, I recommend that you make a list of the following for your own reference. These are a subset of the details that a financial planner would ask you for.

• Your sources of income (e.g., salaries, bonuses, commissions, interest, dividends, allowances), the estimated amounts, and when you receive them;
• Regular inescapable payments that you make to various persons, organisations, and authorities (e.g., taxes, utilities, children’s education) except insurance payments;
• The coverages of all your insurance policies (e.g., death, illness, injury, home, travel, vehicle) and those of your immediate family, their associated premiums and when you have to pay these premiums;
• Regular investments (e.g., monthly regular savings plans) and not-so-regular investments (e.g., estimated annual purchases of securities outside of regular investments) that you make in a year;
• Estimates of your monthly expenditure on the following: (i) Dining out, (ii) Groceries, (iii) Transportation (whether it is your own vehicle, public transport, or anywhere in between), (iv) Clothes, bags, and shoes, (v) Entertainment (e.g., movies, theatre, MMORPG, in-app purchases for that smartphone app game that you’re almost addicted to);
• Existing loans that you are servicing, including mortgages, car loans, unsecured loans, credit card amounts outstanding (rolled over from the previous billing cycle) and the interest rate they are subject to; and
• All the credit cards that you hold, the benefits that come with them (e.g., rebates, miles, free cab rides), the conditions to enjoy said benefits, and any annual fees or interest on balance that you pay.

By the way…

I have challenged myself to write this series entirely on my iPhone. That includes searching for, screen capturing or creating images. I will allow myself to do research on another machine or offline. My fingers do need to stretch after holding the phone for hours on end!

Important Note!

Please note that I am not a financial planner and do not represent any financial institution or insurance company. I do not have any qualifications that allow me to sell or market securities or insurance products of any kind. I only have an interest in securities and insurance products and intend to use this platform only to share my personal experience as a consumer of these products. Any views here are my own and should not be considered as expert advice. For proper financial advice, please consult a qualified financial planner.

This article is part of the series Optimising Your Cash Flow, where I outline my personal experiences in minimising my expenses and debt and increasing my income and net worth.

Finally, clap me if you can!