May 2018
Barbara O’Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension
Cash flow is the relationship between income and expenses. Spend more than you earn and you have negative cash flow. Do the reverse (i.e., earn more than you spend) and cash flow turns positive. Ideally, income from all sources should equal household expenses, including savings for emergencies and future financial goals.
To improve your cash flow, there are basically three sustainable (ongoing) action steps that people can take: spend less, earn more, or do a little of both. There are also things that people can do occasionally to improve their cash flow such as have a garage sale or use eBay to sell personal possessions.
Too often, personal finance articles focus on expense reduction ideas. This is understandable because expenses are generally easier to control than income. After all, individuals themselves can decide to spend less on variable expenses (e.g., food, gifts, entertainment, clothing, etc.) whereas decisions about how much people are paid are made by employers or clients (if you are self-employed).
Nevertheless, there are time-tested ways for people to improve their cash flow by increasing their income. Below are eight small steps to boost your salary:
- Be Valuable: Develop expertise that an employer or clients value. This can be done through formal degree programs, occasional college courses, watching webinars and videos, inservice training at work, freelance work assignments, volunteer work, and/or simply taking personal time to learn useful information.
- Be Visible: Make sure that your employers (or clients) are aware of your talents, skills, and past performance. This can be done, without sounding boastful, through formal reports to supervisors, awards, contributions to workplace newsletters, networking with colleagues, and/or social media messages.
- Have One or More Mentors: Mentoring is a process of transferring knowledge and expertise between workers. Experienced workers typically mentor new hires but mentees, often younger in age than their mentors, can also “reverse mentor” back so that both parties upgrade their job skills and performance.
- Plan Ahead: Think about where you want to be in your career five, ten, and twenty years from now. Then develop an action plan of steps required to get there. For example, you may need to take a certain certification program or move to a new company's home office in another part of the country.
- Keep Your Resume Updated: You may have to send your resume to others on very short notice. Develop a process (e.g., annual or semi-annual updates) to review and revise your resume. Be sure to highlight accomplishments that employers value such as dollars saved, clients acquired, and products developed.
- Develop Good Writing Skills: Writing everything from reports to blogs to company marketing materials is required in most job settings. This skill can be developed through self-study, mentoring and feedback from coworkers, and practice.
- Develop Good Public Speaking Skills: Another valued skill is public speaking at company meetings, professional conferences, and other settings. Like writing, this skill can be developed through self-study (e.g., joining a Toastmasters group), mentoring and feedback from coworkers, and practice.
- Live a Healthy Lifestyle: Employees who are healthy get things done and are not a drag on an employer's productivity. Specific steps to take include eating healthy meals, getting daily physical activity, getting adequate sleep, and “simple things” like disinfecting phones, copiers, and other surfaces with germs.
Do you want to improve your household cash flow? Take small steps to increase your income. Doing so will provide more cash for daily living expenses, debt repayment, and/or savings for future financial goals.