With school graduations happening everywhere, it’s not hard to reminisce about my own graduation. While some kids knew what they wanted to be when they grew up, many of us were still trying to sort things out. I remember thinking, how am I supposed to decide what I want to be when I grow up and select a college major and career trajectory for the rest of my life? I had barely been anywhere that didn’t involve visiting family or the place with the Big Mouse and his friends.
Unfortunately, just getting a college degree doesn’t guarantee a happily ever after, especially if that degree comes at a very high price in the form of student loans. So many people talk about living paycheck to paycheck and usually this is good in the sense that it means they have a job. However, it is not good as this also means the cash flowing in is usually already going out to pay bills, if there is even enough to cover the bills.
Cash flow is very important as it can be the difference in families keeping the lights on, feeding their children, and even keeping a roof over their heads.
Literally, a positive cash flow can mean someone does not end up moving in with family, sofa surfing, or worse, homeless. Ironically, this term – Cash Flow – is usually only discussed in the business realm even though it applies to personal finance as well. Lately, you may hear the term “income streams.” This refers to the various forms of cash flow. It’s trendy to discuss part-time jobs as ‘gigs’ and you can have several “side hustles” for income streams. This is another way to say having several jobs part-time, or otherwise, to keep the cash flowing in.
That all said, even having several income streams may not be enough to keep a positive cash flow. There are people who make six figures and still may be living paycheck to paycheck. If making a high salary or having several jobs is not enough to keep a positive cash flow, what else is needed?
Good Habits! Plenty of articles provide tons of financial advice so sorting out what is best or where do you start can be overwhelming. I have had friends tell me “I am not good with money!” Not being good with money is not a life sentence. It does require a change to live differently which is easier said than done. However, it CAN be done – baby steps! One of the first steps is to look at all of your bills and your income. Do you have any cash left after paying the bills? This is the hardest part: identifying where the problem lies, be it too many bills/not enough cash, shopping too much, or just not saving money!
Usually, it is a combination of multiple factors. And it can be ‘all or nothing’ thinking – meaning, if you can’t save a lot of money, it’s not worth trying. Step one is setting up an emergency/savings account – even if means saving only $5 per paycheck. Even $5 per paycheck is starting a good habit! Yes, even if you don’t think you can do this – you can!!
Next is to identify: are you spending too much on things that you could cut back on or change? Yes, most will say, cut out that “fancy” coffee and you know, if you have a daily Café Mocha habit – making coffee at home could help give you the $5 to start your automatic savings for your emergency fund. If things are not that easy for you, it may be time to look at what larger bills can be cut and/or do you need to find another income stream. Shoot, even if you are covering your bills – did you know (if you have Verizon), you can go to their website and it will review your usage and recommend the best (cheapest) plan! I have done this several times.
When I was in my early 20’s and first working, sharing an apartment with roommates and still trying to finish a degree, I was super busy. Buying lunch out every day was expensive, yet I also didn’t have a lot of time either. I admit for a few months, I made and ate peanut butter and jelly sandwiches. Yes, on the days that I had evening classes, I made 3 peanut butter sandwiches (PB&Js) – one for each meal! I only had to purchase a drink. Before you feel too sorry for me, I like peanut butter and jelly sandwiches. I only had to do this for a few months until I got a raise at work!
I bring this up to say that while it may sound painful, you need a short-term and a long-term plan to improve your finances. As much as I like PB&Js, even I couldn’t keep up that habit more than a semester or two. When my old car “left” me, I bought my new car and then, one of the roommates moved out! Instead of only paying 1/3 of the rent and utilities, I was paying half. Eek! I realized I had only enough money to cover some bills and none left for the car insurance, gas, and food money! Not even the PB&Js! Thank God for waitressing jobs – I was able to work a few nights per week. One of the great things about waitressing is – TIPS! I usually made enough to put gas in my car for the week, provide cash for lunch and some groceries, and while the paychecks were small, I was able to start a savings account and use that money to cover the car insurance. Also, guess what I love more than a PB&J – pizza! Working at a pizza place also provided a free meal on the nights I worked. Again, I only had to work the extra job until the next raise at my day job.
Depending on where you are in your financial situation, it may be harder than a few PB&Js along with an ‘extra gig’ here or there. However, a problem once identified is a problem that can be solved! Looking at your finances, you may need to put multiple strategies into action like the Debt Snowball method. It may take changing jobs to get that ‘raise’ at work to get the income stream positive. That said, starting – even with only saving $5 – can be the first step! And while it may feel impossible, dream about your future and where you would like to be financially. Keeping that vision can help you start and keep those good habits and that will lead you to a more comfortable life.
*Kaela’s Cookies – Falls Church, VA (@Kaelas.Cookies)
