The foundation of financial success

From a sporting and business perspective, the standard approach to transform core fundamentals into a solid foundation is through engagement with a coach or mentor who provides guidance and support via a framework of learning and execution, and a system of target setting and tracking. Cash flow management is the foundation of saving and investing, and provides the backbone to any strategic financial plan.  A recent Galaxy Research poll found that 52 per cent of Australians say that they are not confident with managing their money, do not know how to budget well, and do not live within their means.

This under confidence stems from the fact that most people do not receive any formal education or professional coaching in this area.  They learn from a process of behavioral modelling, and sometimes painful trial and error. These on-the-fly type cash flow management learnings often have major biases towards short term and immediate needs over more important medium to long term goals.

Another layer of complexity may be added when people join financial relationships with spouses or partners.  The initial learnings from behavioral modelling and personal trial and error then often integrate with a totally different set of behaviors resulting in a clash of financial values and/or objectives.  Under these circumstances, unless both spouses and partners agree to lay down a solid foundation of effective money management, the probability of success in the long term diminishes.

To achieve financial and lifestyle goals the family entity needs to run at a surplus and make a profit, just like a business.  Both entities need to maximise and account for income, then allocate resources in the best possible way to ensure progression towards defined goals.

I often find that when I first sit down with new clients they feel a bit lost.  They are often successful,  hardworking,  earning good money and living extremely busy lives, but have little understanding of whether they are on track to achieving their important financial or lifestyle goals of perhaps buying a home, raising a family, or preparing for retirement.  Often there is no formal framework or automated cash flow system in place to ensure their family is running at a cash surplus and that financial and human capital resources are being put to their best use.

To assess whether you could be managing your cash flow more effectively, ask yourself the following questions:

  • Do I truly understand where my monthly income goes?
  • How much of my monthly income is used on essentials, and how much is available as disposable or discretionary spending?
  • Does a surplus or a shortfall in monthly income exist?
  • If there is a surplus, do I have a plan as to how I am going to use it?
  • Have I clearly defined my financial objectives and goals?
  • Have I clearly defined how I am going to achieve them?

If answering the above questions has prompted you to think that you might benefit from financial advice, please call Orbis Wealth to make a complimentary appointment.

We provide financial coaching services to empower clients to make the best financial decisions whilst building savings capacity.  Our money management system is backed by leading software and tools to deliver a personalised financial solution.

Seeing clients achieve clarity around their cash flow as they progress and achieve their financial goals lies at the foundation of our own business goals.

Simon Dundas-Smith

Important information and disclaimer
This article has been written by Simon Dundas-Smith, Managing Director of Orbis Wealth Management.   Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances.

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