Understanding your cash flow (how much money comes in versus how much goes out) is a fundamental first step for any financial plan. Most of us think of cash flow as something that only business owners need to worry about. These days, however, individual finances are almost as complex as business finances, making it difficult to monitor your financial health. Skillfully leveraging your cash flow can help you set up savings, make your debt more manageable, and know what your assets are.
So, what can you do to ensure that you have more money flowing into your accounts than out of them? In other words, how do you attain positive cash flow? Mandy Kelso, Head of Financial Education at TD Bank, suggests four “A’s” that individuals can use to obtain positive cash flow and secure their financial health.
Assess What You Have
Between side hustles, student loan payments, credit card interest, automatic debit payments, full-time jobs, payment apps and a never-ending list of subscriptions, the modern-day person has cash flowing into and out of a lot of pools.
It can be intimidating to capture your financial footprint. It’s okay to start small. The important part is making that internal decision to pay attention to your finances. Take advantage of tools like budget spreadsheets – they’re there to help you.
Once you have a sense of where your money is going, assess whether the things you’re paying for are truly adding value to your life. Be realistic. Ask yourself whether you really benefit from subscribing to that tabloid magazine app or whether you’re ever really going to work out at that gym five towns away.
Assessing what you have isn’t limited only to liquid assets. If you’re struggling to pay rent or are living paycheck to paycheck, you’re not alone. Take stock of your resources beyond your bank account. Maybe your daycare has gotten too expensive, but your retired neighbor is willing to watch your kids in return for a ride to the store.
Talk to your friends, family, and community. Don’t be afraid to ask for help. Asking for what you need gives everyone around you the permission to be vulnerable too.
Automate For Future Success
Now that you know what your assets are, it’s time to make them work for you. Let’s say you’ve determined that you have enough money at the end of the month to put aside $20 from each paycheck. Set your future self up for success by automating that transfer to your savings account.
Maybe you’ve decided that your financial goal is to chip away at your credit card debt. Automating might look like setting up a payment schedule so that a fixed amount automatically goes toward your debt each month.
Setting your finances up so that everything is landing and coming out of one place is another way you can leverage automation. When you assessed your payment apps, maybe you found money sitting that you had no idea was there. You can simplify the streams of inflow by picking one main payment app that you use and asking your friends and family to only send money to that app.
Remember, everybody is different. There is no “one size fits all.” Automating could look like setting aside a bit of cash into a physical envelope. It could even mean saving all your spare change in a jar for a rainy day. You set up the guardrails that you know you can live by.
Adapt Your Budget
Rising living costs, inflation, and lifestyle creep can make it easy to go from $100 positive cash flow to $100 negative cash flow if you’re not vigilant.
Assess where you are financially on a regular basis. A sudden layoff or unexpected medical event might mean you need to pivot on a dime and adapt your budget to weather the storm. Communicate with your household about what certain financial needs and wants may look like. Work together to manage expectations, discuss your game plan and responsibilities, and share ideas about how to save as a family.
Alert! Alert! Alert!
The final “A,” alert, helps you protect what you’ve built. Set up alerts so that you’re notified when money goes out of your accounts. Give yourself peace of mind by adding protections against fraud and unexpected payments. You can also set up alerts for when your accounts are below a certain amount or for credit surveillance.
Practicing good financial hygiene is just as necessary for your child starting college as it is for your mother-in-law enjoying her retirement. At every stage of life, you should be setting up alerts for your finances and continually assessing your cash flow. Whether you have $1,000 or 1 cent, leveraging your cash flow and seeking out financial education can help you change money from an obstacle into a tool for future success.
For more on personal finance topics
If you have more questions about personal finance topics, visit the Learning Center on TD Bank's website. You can find more TD Bank services at TD.com.
We hope you found this helpful. This article is for informational purposes only and is based on information available as of March 2025 and is subject to change. This content is not intended to be used or acted upon with respect to any client's specific circumstances. For specific advice about your unique circumstances, consider talking with your qualified professionals.
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