Question

1) List and explain some ways for one to improve their personal cash flow situation by increasing their net cash flows or to reducing their cash flows (if possible) in the near future. Be realistic.

Answer 1

Some ways t improvise personal cash flow -

1. Increase in Income - For example structuring of salary in such a way to reduce to the tax burden and increase the takeaway, developing alternate source of incomes (income from interest). Reducing the dependency on ones primary income on YoY basis by way of exploring alternate cash flows. (e.g renting or property, blogging, surveying)

2. Reduction in expenses - Budgeting the expenses to analyse for irregular or unwanted expenses, infrequent expenses. Further breaking down the expenses to the ones which are not required, the ones which can be deferred eg instead of annual premium breaking down into 12 installments of monthly premium.

3. Use of credit card - Credit card offers interest free credit period in the range of 30-45 days which can help to augment the cash flows in case of tighter crunch however it is essential to pay off the debt in timely manner as per the due dates to avoid excessive cascading interest costs.

4. Refinance/Transfer of debt - Interest rate over debt varies from one bank to other and varies with time and type of loan, with the current liability of debt being higher in case of high interest rate leading to higher outflow, one can opt for shifting or refinancing the same to an institution offering little bit lesser interest rate so that the monthly/peridic outflow will be lesser and will lead to increase in cash flow.

These are some of the ways to increase cash flow.