Simplicity may be the key to cash flow management for most people.

Different payment options and new apps can provide clear logistical benefits for people who fall into this group of financial consumers. Credit cards can make pulling the trigger on a large, nondiscretionary expense easier (flights for that bachelorette party, for example), especially when that purchase won’t be “consumed” until a later date. This form of financial automation removes the burden of remembering to pay bills from the individual, without worrying that they will overdraw their cash accounts.įinally, positive cash flow creates a buffer when purchase timing doesn’t align perfectly with the arrival of a biweekly or monthly paycheck. So long as the funds are available to pay off a credit card balance every month, using credit can offer a more easily tracked spending history, generate rewards from credit card companies and eliminate the risks associated with carrying cash.Ī sizable checking or savings account balance also can enable someone to set up automatic bill payment for important recurring expenses, such as rent, utilities and even investment contributions. How does the intersection between cash flow and financial technology look in practice? People who have consistently positive cash flow may opt for credit card purchases over cash purchases. With a Positive Cash Flow, Use Fintech Where It Helps When you’re ready to look at where and how the cash is flowing within your personal budget, here are five ways to implement a personal cash flow management strategy. Others with fewer resources or less experience within the financial system may become vulnerable to costs or limitations that erode the technology’s benefit. People with financial resources and strong financial knowledge may have the access and savvy to embrace these tools only when they work to their advantage. One side effect of this dynamic is that new tools will not serve all customers equally. However, companies in the financial industry create new products and services to benefit their bottom line.

They may force people to be realistic and thoughtful about their financial circumstances, habits and preferences. People also may pull directly from these bank accounts when they send mobile payments via apps such as Venmo and PayPal.Īs with much new technology, these new tools for managing cash flow can prove both a blessing and a curse. Others prefer debit cards, which offer the benefit of a more direct connection to the cash available in someone’s bank account at a specific point in time. Smartphones enable us to access these credit accounts without actually pulling out a plastic card.

Some people almost exclusively use credit cards to make purchases. Technology and finance industry “innovations” now have created myriad ways for people to purchase the goods and services they need in life. Financial Technology’s Mixed Impact on Cash Flow Management In 2021, it’s hard for many people to envision our past economy, in which so many transactions relied almost solely on cash-actual dollar bills transferred from one person’s wallet to a business’s cash register. Yet, keeping up with cash flow has arguably become more complex, if not more challenging, in recent decades. Many elements of personal cash flow management may seem straightforward to an adult who has generated income, paid bills and made purchasing decisions year after year. But the ways in which cash moves into and out of accounts-including unexpected expenses and salary increases or bonuses-eventually will determine how successful someone is in achieving their goals. Even the most impressive budget is limited, though, if those numbers can’t translate into an overall strategy that yields at least some positive cash flow each week, month or year.Ī thoughtful, customized budget may help set people on a path to pursuing certain financial goals, such as saving for a down payment, college or retirement. For many people, this process may start with a budget, some of which will be highly organized and detailed. The Limits of a Personal Budget Without a Cash Flow StrategyĪll types of people can benefit from viewing their money through the lens of total cash flow-recent graduates, single individuals, married couples, retirees.

Personal budget