Question

Here are five easy rules for creating a simple cash flow plan:

Project monthly sales (and curb your optimism).

Remember receivables

Consolidate predictable.

Adjust for growth

Plan for the unforeseen

Successful long and short term financial planning, including cash flow planning, for corporations is very important. Apply the five easy rules and long and short term financial planning, including cash flow planning to personal financial planning. How can you utilize the above to improve your personal financial health?

Answer 1

As we know that successful long and short term financial planning, including cash flow planning is very important for corporations but it is also true that these things also can be utilized for improving personal financial health.

Every individual also have to follow same pattern as big companies & firms follow. Main difference is that a firm or company will be doing all these things at large scale and an individual will do for a small level.

Now let’s see all things one by one that are used to improve personal financial health.

Long-term financial planning is need to be done efficiently by an individual because without proper long-term financial planning an individual can not estimate about the long-term financial requirements. After long-term financial planning small short-term plan must be made because to review short-term progress of long-process we need short-term plans.

Cash flow planning also very important factor because an individual always need cash for basic requirement either for short-term or for long-term. Hence cash flow planning is also very important so that regular cash requirements can be meet out.

As per question five major points are given;

·        Project monthly sales (and curb your optimism).

·        Remember receivables

·        Consolidate predictable.

·        Adjust for growth

·        Plan for the unforeseen

Now let’s see the importance of these five points and how these are helpful for personal financial health?

1. First of all an individual need to project his / her monthly revenue & expenditures more accurately. As company or firm project about monthly sales whereas an individual will project his total monthly revenues and expenditures.

2. After that an individual will keep proper records of all his personal receivables so that he or she can accurately know that what amount can be received from those receivables.

3. An individual need to consolidate all personal predictions about all possible revenues & expenditures so that a proper consolidated image can be prepared for future course of actions.

4. An individual also should be ready to make required adjustments as per personal growths because without proper adjustments an existing plan can not be fit for future coming time. Hence it is true that adjustments must be made time to time as per personal growth.

5. An individual always should make some provisions for unforseen situations because some unpredictable events can take place any time in life of an individual. Hence a proper funds and other provisions must be made for these unforeseen situations.

So on the basis of above details it is clear that all said factors can be used for improving personal financial health.