Build Margin of Error in Your Cash Flow Plan
Prefer to listen rather than read? Pair this post with Deliberate Money Moves Podcast: Build Margin of Error in Your Cash Flow Plan.
No matter how much we plan or how much confidence we have in the future, it almost never turns out exactly as we expect. It might be fun to say you plan to die with nothing in your bank account but it’s not realistic.
Instead, allow for cushion in your cash flow so that you always have a little bit more cash than you had planned on having.
This Will Help in Two Very Important Ways
First, when things turn out a bit worse than you expect or when some unexpected cost arises, you will be able to confidently take care of it out of this margin.
Second, when a financial opportunity shows up, you’ll have some extra cash to take advantage (even if it’s as simple as a big sale).
We are talking about retaining flexibility in your finances. You need flexibility because we never really know what the future might bring!