Cash flow - Episode 1- Planning

EPISODE 1: PLANNING

 

 

CONTROL YOUR CASH FLOW WITH SAM

EPISODE 1: -PLANNING

Charlie:
Big hello to everyone out there today we're here with Sam Best to discuss our first in a 4 part series on our financial management.

He's from Creative Wealth Engineering and his job description is a cash flow coach.

Sam what exactly does that mean?

Sam:
Cash flow coach is, for one of a better term is, someone that would help you like a personal trainer would help you with physical couching, but for your money.

So I generally say look, I'm a personal trainer for your money.

I guess it's come about because of my experience as a mortgage broker and a financial planner. There's really been a need, I think, for people just to take some of the frustration and get a lot of focus on their results, faster.

Charlie:
So, you think this is a better avenue to help people within your practice?

Sam:
I think so, yeah, absolutely.

Charlie:
If my financial situation is a bit out of control what would be the first thing that I would do?

Sam:
Like with anything whether it’s your financial situation or any aspect of your life the first thing you should do is really take time out.  

I always say, this whole aspect of planning is taking time out by yourself, and ideally in a quiet place.  Where you can actually get pen and paper and sit down and ask yourself some pretty long hard questions about where you actually want to be.

And that's where I always say to start.

The first thing and golden rule of course is DON'T PANIC

Charlie:
When you are setting these financial goals, what is the best way?

Sam:
Well it starts with, ok, when you are in a quiet place and you got that time by yourself.  If you're away from distractions of the day to day, the stuff that tends to cause frustration, and you just ask yourself
“well ok, time wise in 12 months where do I see myself?”

And just ask yourself that, and what ever comes to mind regardless of what circumstances are going on at the moment just write down, “well ok in 12 months I’d like to be ...” and whatever comes to mind, write it down.

Charlie:
It's as easy as that?

Sam:
Absolutely and that's where you start. It's all about starting.  You can always change it but first you must start it.  

Charlie:
We were discussing before about 3 financial goals and you mention something, the BHAG, so what exactly is the BHAG?

Sam:
BHAG is Big Hairy Audacious Goal.  
So you're getting there, a picture in your mind, as you are writing down these goals or the things you really want to achieve but at the same time it's only steering you in a certain direction.  

But if you were to ask yourself “if you had all the money in the world”, so the perfect situation.  All the money and the time more importantly because there are a lot of quite wealthy people that have a lot of money but no time. Cause their 2 aspects of wealth.
“What would you do?”

“What is your purpose?”

“What would you love to do?”

Is the question I always ask people.  “What do you absolutely love to do?”

Charlie:
So defining this goal, how does that exactly help us in our own wealth?

Sam:
It helps you to steer a path.  It helps to be more aware of actually what’s going on and helps you make decisions cause ultimately where we are today is a result of all the choices we've made up until this point.

Charlie:
Thank you very much Sam for sharing that information with us.  That is the conclusion of the first in the 4 part series for managing our financial wealth. 

Stay tuned for the next part on CONTROL.
 

 

 

Cash flow - Episode 2-Control

EPISODE 2: CONTROL

 

 

CONTROL YOUR CASH FLOW WITH SAM

EPISODE 2: -CONTROL

Charlie:
Hello again, we're back with Sam to talk about the second in a 4 part series.

Previously we looked at the first part which was strategic planning and our goal setting and now we are going to take a look at Control.

Sam we were talking about taking control of your financial situation. What exactly does this mean?

Sam:
Talking control really is about identifying what it is that you personally can control in your life and particularly when your talking about cash flow, by the money comes in via your wages and your pay and how it flows back out again.

So taking control and identifying how that works as opposed to things you really don't have control over.

And that just means, again, you've got to use a coach or at the same time have the opportunity to sit down and work out to start developing what I call a "living budget".

Charlie:
What exactly do you mean by a "living Budget"

Sam:
Well look, again, taking control is something that if you identify that you, for example, are spending a certain amount on fuel and you have no idea what it is then you need to be able to quantify it. 
It's also about having a key or a bank account set up in a certain way so that it makes it easier for you to not over spend.

 
Charlie:
So this is all about being easy for the user?

Sam:
Yeah, absolutely and talking about a living budget that's something that most people, and the "Budget" word is a swear word to most people vocabulary
Its something that everyone shies' away from.

They know they have to do it, but they just don't do it for whatever reason or you know we get to the end of the year and its new years resolution time and they say well I'm going to do this.  Going back to goal setting like I said previously.

So most people are working in the past and I always say well you should absolutely be not working in the past, you should be working towards the future. 

Those goals that we sat down and wrote about put them in but at the same time plan what your expenditure is going to be over the next 12 months.  What you actually want to do not what you think you have to do or you can't afford. 

So again it’s asking better questions.  It's about what or how can I better afford this, how can I do this better, that's when we are talking about control.

Charlie:
We've got this living budget and we've analysed what we have direct control over what other things should we take into account?

Sam:
Most people understand that to get certain things in life or to look good you do sometimes have to take on a little bit of borrowing.

Charlie:
Debt?

Sam:
Yes the "D" word - Debt that's another swear word.  A lot of people don't realise that there's a smart way to do that and a really dumb way.  Debt is a 2-edged sword.  It can really cripple people.

So, we talk about good debt and bad debt.

Charlie:
What exactly do you mean by good debt and how can we use our debt for our benefit?

Sam:
I prefer to say that there's good debt and there's absolutely atrocious ludicrous debt.

It's Identifying, and it goes back to the idea of what is an asset? Or what is a liability?  What is something that is going to put money in food and feed you? Putting money in your pocket so to speak or what is going to take money out of your pocket if you weren’t able to work.

So anything that you’ve borrowed money for that if you weren’t work you’d have to keep shoving money into it, for example we talk about credit card debt.  You’ve got a credit card balance. If you weren’t working pretty soon the credit card company is going to go "hey, you’re not paying it.  What's going on?"

Cars, holidays, things that depreciate in value or loose value.  So if you’re borrowing to buy things like that.  Even simple things in the house hold these days like laptops, furniture, tables, chairs, all that kind of stuff.  If its borrowed money its ludicrous, its just stupid.

I quite often will sit with clients and say without waving a really big stick I say' Look why have you done that?" lets understand why and how can we turn that around?  Cause when we talk about growing or borrowing things that grow in value, now we are starting to talk about things that...

Charlie:
Like Shares?

Sam:
Well all types of investment instruments, that kind of thing.  That allows you to grow your asset base that eventually puts money back into your pocket without you having to work. 

That's the idea about growing good debt.  Getting leverage that way.

Charlie:
That's the conclusion, thanks again Sam, that's the conclusion the second part in the 4 part series and we looked at control, and in the next section we will be talking about discipline.

Thank you