Most peers that I know are not adept enough to manage their own cashflow efficiently. Part of the reason I feel they lack the aptitude to do that is because they are so used to drawing fixed income monthly as a salaried employee that they depend on the predictability of these cashflow they received. When the salaries are in, expensive meals and shopping are common to sight amongst a few people I’ve known. However, when a week has past, you can then clearly see them scaling down on their purchase gradually to the point when it becomes too obvious to notice.
Interestingly as I look and experience around, the big problem salaried employees face when it comes to December is the early salary payout timing as compared to the other month. This happens especially when companies are trying to close their book in the fiscal year so any major settlements need to be done earlier. Some companies do even include the annual wage supplement (also known as the 13th month) paid to the employees. What I do notice from most of the peers is these amount of money would finish by the time Christmas is over and now they are left planning the rest of the month + Jan with almost nothing left.
This begs the question to all. If you were an employee and were given a choice to receive
A.) a year in advance for the work you’ve not serve
B.) a year at the end after you serve the whole full year
C.) monthly salary like what most companies are doing
Let’s assume time value of money is not the issue for this. Which of the following would you choose?
Everyone in the right frame of mind would surely choose option A because it’s the most obvious choice to receive money earlier. But whether or not one can handle their psychological frame of mind and planning is an entirely different ball game. Perhaps you would change on how you would treat on your expenses too from the way you receive the income. I think it’s an interesting exercise to ponder.
Personally, managing cashflow is not within my main circle of competence and I am trying to improve myself every time I do the exercise. Given that I don’t do specific budgets unlike many bloggers did and my biased dependence on salaried income like many people did spells difficulties to plan my cashflow accordingly. I am in the midst of improving that myself though and I believe I would be better each round but it takes experience and scheduling to work well.
What about you? Are you adept at managing your own cashflow? How do you do it?