The Cashflow Waterfall is an effective strategy to help you manage your monthly cash flow.
The Cash Flow Waterfall concept is designed to help you organize your monthly cash flow without crazy spreadsheets or restrictive budgets. It'll help you achieve your goals quicker by keeping your cash flowing with a purpose down to the last drop.
Without a cash flow strategy, you may find yourself on the financial treadmill. What's the financial treadmill? It's where you feel like you're working harder and harder but always ending up in the same financial position year after year. Sound familiar?
Do yourself a favor and kick the financial treadmill to the curb by implementing your Cashflow Waterfall. It'll reduce your stress and give new life to your cash flow.
The key concept is to direct your cash flow into separate categories using different bank accounts for certain functions. Once your accounts are set up, then you can implement your Cashflow Waterfall using four simple steps.
Step 1: General Account - Your first account is your general checking account. This is the monthly amount of money needed to run your household.
Step 2: Fun Account - For your plan to work long-term, it's important to have fun while you're doing it. That's what this checking account is for. Determine what amount fits your lifestyle and then intentionally fund this account.
Step 3: Emergency Account - Life happens. An emergency savings account is there to pay for the unexpected. Once this account is full, your cash will continue to flow over to the next account.
Step 4: Goal Account - All remaining cash flow is directed to this savings account. Use this account for your financial goals you want to accomplish over the next 12 months. If your goal is debt reduction, allow this account to fill for 90 days then empty it to make a large payment towards your smallest debt. We've found this strategy to be motivating because it gives you a greater sense of control over your financial life.
Give yourself some flexibility when implementing the Cash Flow Waterfall. We've found it takes 90 days to customize this strategy to fit your financial life.
Contact us today to start your own Cashflow Waterfall.
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Josh created the Cashflow Waterfall concept after realizing his clients were unhappy with the flow of money through their lives month to month. Josh is the founding partner of Clarity Financial, LLC and the creator of the Portfolio Waterfall retirement income distribution strategy.
Brian entered the financial services industry after nearly 20 years in Christian ministry. He joined Clarity Financial in 2019 to continue his life-long mission of serving others.