Last week, we discussed the meaning of financial intelligence and we defined it to be the way you manage all the money that comes into your hand. This week, we want to see how as a family, we can imbibe financial intelligence into the family circle. Financial intelligence is very important in a family as it literally helps to keep a family “afloat” and not sink into debt. Cash flow is the money that is moving (flowing) in and out of the family within a period of time. As a family, we would want to see or check that we are not having a negative cashflow by calculating how much each family members earn in a given period of time (hourly, daily, weekly, monthly, quarterly or yearly), how much expenses are also being incurred by within this period of time.

For example: Mr. A and all members of his family earns #300 naira a week and spends #230 a week on expenses (like light bills, water bills, food and beverages, transport, airtime and data), so his cash flow would be calculated as:

cashflow = income – expense which in this case would be  

 300 – 230 = 70 naira.

Having a detailed knowledge of cash flow helps an individual or a family to plan ahead for the future, it helps you to see how much of your money you can save or invest, it helps you see how you can pay off debts. Sometimes, we may discover that we spend money unnecessarily on things we do not need. A cash flow management will help us to fix these as we would not spend money impulsively but instead we would spend money wisely, we would develop a good saving culture and see more need to invest or tie our money down as asset. Cash flow helps us in times of disaster or economic recession. So many families because of the economic situation of the world do not manage their cashflow properly, but not to worry, help is here, below are tips one could adopt as an individual or a family to help you avoid living beyond your means without you even knowing and this could have detrimental effects for the future.

i) Create a budget: Know what comes in at within a period of time and write out all the things you spend money on during that time period and try as much as possible to include recurring cost as well as non  recurring cost.  

ii) Reduce unnecessary cost: Take a good look at the budget and remove cost that you do not really need. iii) Stop impulsive spending: Do not buy what you do not NEED

iv) Self Discipline: Make a determination to keep track of your budget.

v) Save up in a different account or invest whatever part of money left with you.

vi) If you are in debt, find ways to increase your income and write out how and when to offset previous loans while trying not to take more loans.

Yes, a careful consideration of cash flow would do more good to your family and help to keep track of the family spending and above all, one would be properly able to plan for the future of the family without fear.

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