SEP 09 2019
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SEP 09 2019
All Posts

Cash is always king

Posted by: Henry Ford in opinion

My clients by virtue of the financial security they have secured all seem to share a common trait.  Regardless of how much money they have, they all demonstrate good control of their day-to-day cash.

Back in the day when we worked with cash, day-to-day control of cash was easy. Simply take some money out of the bank at the start of the week, and make it last all week. It was simple to see how you were tracking. Just look in your wallet. Every transaction felt real. Breaking a big note felt hard. The process of physical money supported good cash management.

And then we started using Eftpos. Suddenly it was not so easy to see where our money was going.  Paying bills became easier with direct debts, the ATM simply gave us money if we asked for it and often when we spent money it was simply a case of entering our PIN. It has become much harder to keep track of where our money is going. That physical prompt of looking into the wallet was not so easy anymore.

But my clients have understood that looking after day-to-day cash flow makes them feel secure and in control. So, they have developed systems. My observation is that any system is good so long as it works for you. For those who don’t have a system then here is a suggestion. This system has been around for generations and it started with cash and jars on the mantelpiece.

Back when all transactions were in cash the financial controller of the house had three jars for money management.  The middle jar was where all of the money that was earned went.  Each pay day the money would go in the middle jar and then some were taken out and put in the rainy-day jar.  That jar was to accumulate money for things that were unexpected, but that at some stage was going to happen. Things like a leak in the roof, a major medical event etc. Then each week they would also take out enough money for all the expenses required that week. They would put that money in the third jar. It was so easy to see how that money was lasting. And what was left in the middle jar was for the expenses for the month.  It worked, and it provided a sense of control.  

Now we replace those jars with bank accounts and instead of transferring the money physically we can use direct debts.  As often is the case tried and true systems are timeless, we just need to adapt to available technology to make them relevant today.

If you have a system, great. You are in control. If you don’t just give it a try. There is nothing like feeling in control of your money, it makes you feel in control of your life.

Henry Ford is an Authorised Financial Adviser and Director of Rutherford Rede Limited. He specialises in helping clients who need assistance in managing the financial consequences of changes in their lives. A Disclosure Statement is available, on request and free of charge.

Tags: Money Week, Special interest topic, investing,

My clients by virtue of the financial security they have secured all seem to share a common trait.  Regardless of how much money they have, they all demonstrate good control of their day-to-day cash.

Back in the day when we worked with cash, day-to-day control of cash was easy. Simply take some money out of the bank at the start of the week, and make it last all week. It was simple to see how you were tracking. Just look in your wallet. Every transaction felt real. Breaking a big note felt hard. The process of physical money supported good cash management.

And then we started using Eftpos. Suddenly it was not so easy to see where our money was going.  Paying bills became easier with direct debts, the ATM simply gave us money if we asked for it and often when we spent money it was simply a case of entering our PIN. It has become much harder to keep track of where our money is going. That physical prompt of looking into the wallet was not so easy anymore.

But my clients have understood that looking after day-to-day cash flow makes them feel secure and in control. So, they have developed systems. My observation is that any system is good so long as it works for you. For those who don’t have a system then here is a suggestion. This system has been around for generations and it started with cash and jars on the mantelpiece.

Back when all transactions were in cash the financial controller of the house had three jars for money management.  The middle jar was where all of the money that was earned went.  Each pay day the money would go in the middle jar and then some were taken out and put in the rainy-day jar.  That jar was to accumulate money for things that were unexpected, but that at some stage was going to happen. Things like a leak in the roof, a major medical event etc. Then each week they would also take out enough money for all the expenses required that week. They would put that money in the third jar. It was so easy to see how that money was lasting. And what was left in the middle jar was for the expenses for the month.  It worked, and it provided a sense of control.  

Now we replace those jars with bank accounts and instead of transferring the money physically we can use direct debts.  As often is the case tried and true systems are timeless, we just need to adapt to available technology to make them relevant today.

If you have a system, great. You are in control. If you don’t just give it a try. There is nothing like feeling in control of your money, it makes you feel in control of your life.

Henry Ford is an Authorised Financial Adviser and Director of Rutherford Rede Limited. He specialises in helping clients who need assistance in managing the financial consequences of changes in their lives. A Disclosure Statement is available, on request and free of charge.

Tags: Money Week, Special interest topic, investing,

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