Cash flow planning: What’s your motive?

When cash flow planning, figure out your motive for wanting to change your financial behaviour.

This is key, since there’s a difference between being motivated to change and understanding how to maintain focus. Once you know why you want to develop a cash flow plan, you can more easily follow that plan and achieve your goals.

When starting the cash flow planning process, don’t simply say you want to become debt-free in the long term and save for retirement. These are eventual outcomes you may truly want to achieve, but they generally aren’t people’s only underlying motives.

Use the following litmus test to uncover whether you’re sharing your true motive.

• Is it personal? Many people want to retire comfortably and pay off their mortgages, so these aren’t overly personal or emotional motives. If you list these goals, dig deeper and think about your more immediate, specific dreams.

• Will you be rewarded in the short term? Your main goal can have an element of the future, but you’ll want to see some progress and benefits within the first 12 months. Your motive needs to connect to your current life and circumstances.

• Will you stay on track? By identifying a personal, achievable motive, you’re more likely to stick to your cash flow plan. If you want to alter your cash flow so you can take your kids to Disney in six months without racking up debt, for example, you’ll be more inspired than if you’re aiming to be debt-free in 25 years. You need to be able to consciously make better choices whenever you’re tempted to go off-plan.

Stephanie Holmes-Winton is a Halifax-based financial services educator and speaker.