Ever feel like your new paycheck just came in but you’re just passing through? Maybe you don’t know how to monitor cash flow properly. In fact, the right way to monitor cash flow can help you control your daily finances and prevent you from getting stuck at the end of the month. Let’s discuss it from the beginning to make your finances more stable!
What is Cash Flow?
Cash flow is the flow of money in and out of your account or wallet every day. Incoming money can be from salary, side business, or bonuses. While outgoing money is usually for daily needs, installments, and unexpected expenses.
If you have a positive cash flow, it means you are saving more than spending. But if the cash flow is negative, it could be that you are too wasteful. Therefore, it is very important to know how to monitor cash flow so that you can be wiser in managing finances.
Why Should You Care About Cash Flow?
Understanding and applying how to monitor cash flow is not only for business people or office people, but for everyone, including friends who are still in college or just starting work.
By monitoring cash flow, you can know where your money is going, so you can remove unnecessary expenses as well as prioritize the purchase of something.
How to Monitor Daily Cash Flow that You Can Immediately Try
1. Record All Expenses, No matter How Small
The first and most fundamental step in how to monitor cash flow is to record every expense, no matter how small it is. Many people often underestimate small transactions such as buying Rp15,000 coffee or paying Rp5,000 for parking. In fact, small expenses made every day can accumulate into a large enough amount in a month.
If you are lazy to record expenses instead, you can use a financial recording application that is available for free on smartphones, or even record manually on a spreadsheet. The important thing is consistency. By diligently recording, you will have real data that can be analyzed.
This will help you control your spending and develop a healthier financial strategy. This way of monitoring cash flow looks simple, but has a big impact on long-term financial management.
2. Divide Expenses by Category
After all expenses are recorded, the next step in how to monitor cash flow is to group expenses according to categories. For example, basic needs (such as food and rent), transportation, lifestyle (hanging out, shopping), to savings or investment.
For example, if it turns out that lifestyle expenses dominate up to 40% of the total cash flow, it can be an alarm to start adjusting your lifestyle. By dividing the categories, you can also set a maximum limit per category so as not to overspend. This is a more strategic way to monitor cash flow.
3. Use the 50/30/20 Method
The 50/30/20 budgeting method can be one of the most suitable techniques for monitoring cash flow for beginners. It’s pretty easy: allocate 50% of your income for basic needs like food, shelter, and transportation. Then, set aside 30% for wants like entertainment or vacations, and the remaining 20% for savings and investments.
What makes this method interesting is its flexibility. If your income increases, you can keep the allocation percentage or adjust it slightly. The important thing is that there is discipline in its application. By applying this method regularly, you will find it easier to manage your income and expenses in a balanced way.
4. Set Daily Expenditure Limits
Ever feel like your money suddenly runs out even though you just got paid? Maybe you haven’t set a daily spending limit. One way to monitor effective cash flow is to limit how much money you can spend every day. For example, you set a maximum daily expenditure of Rp100 thousand.
In addition, daily spending limits can prevent you from impulse shopping. When you know there is a limit, you will be more careful and consider every purchase. This is not about being stingy, but about financial discipline. Slowly but surely, you will get used to living within your means and not easily tempted by discounts or shopping FOMO.
5. Evaluate Every Week
Weekly evaluations are often missed because they are considered troublesome, even though this is an important part of how to monitor cash flow. Every weekend, take 10-15 minutes to review your spending during the week. See if you spent your money as planned or if you overspent.
This evaluation can also open your eyes to spending patterns that you may not have realized. For example, it turns out that you often order food online without realizing the cost is greater than imagined. By regularly conducting weekly evaluations, you will learn from your mistakes faster and build healthy financial habits.
Once your cash flow is organized, the next step is to think of ways to grow and preserve the value of your money. One option worth considering is digital gold investment. Apart from being easily accessible, digital gold is also safe, stable, and suitable for various medium to long-term financial goals.
The good news is, you can start investing in digital gold easily through the Treasury app. Starting from a small amount, you can already build a valuable gold portfolio for the future.
Let’s take advantage of this convenience to complete your financial management. When your cash flow is healthy, it’s time to level up by starting digital gold investment at Treasury!
