How to manage Cash Flow

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Cash flow is King. That idiom is a financial management principal. Cash flow is important in your live. You need cash to fulfill basic requirement. You need cash to buy food, clothes, book, perking fee etc. Not all these item can buy by credit card.

I have story about my friend in college. He ask me to borrow little money or about US$ 2. That money was not much but that money could buy six times breakfast in Indonesia .Actually his parents is richer than my parent. His parent also gave him money two or three times than mine. By the way, my parent gave me just 50.000 rupiahs (about US$ 5) for a week.

He borrowed my money for buying copied book. He said that his money is in Bank. He didn’t ready to cash his money.

Imagine if he didn’t have money or friend. Where would he ask for money? Meanwhile his parent was far from him. From story above,o you can learn about my story above that cash is important. So, you must manage you cash flow.

Experts say that you must provide at least six times cash of your basic needs. For example, your salary is about US$ 1000. So you must have cash at least US$ 6000. If you don’t have enough money you can collect until enough. Don’t put that US$ 6000 in investment. That money will keep from unexpected happen. E.g., your child is suffering sick, so you must prepare money for hospital fee. Hospital fee will charge you much money. You must prepare the fee otherwise your child can not back to your home.

This tips that I suggest may help you to manage your cash flow:

First, you must know your actually salary. The salary includes basic salary, bonus, tips, and other. E.g., your have US$ 1000 salary, Bonus US$ 50 and others US$ 100 every month. The total of salary equals the sum of salary, bonus and others.

Second, pay your debt first because debt is an obligation. If you don’t pay debt this moment, you will be charge by more interest. So you must prepare more money for that.

Third, you must recognize your Account Receivable (A/R). Collected you’re A/R that you can collect this month. This money may be useful for your cash.

Fourth, you should sorter your needs. Live below your means. Delete the needs that doesn’t important. e.g., buys leisure things like movie, junk food, expensive shirt etc. If you have much money, buy leisure things are doesn’t matter.


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