How Can Cash Flow Be Improved?

By Peta Winkless, Operations Manager

Smarter cash flow

‘Cash flow is so important!’ Whatever your income, if you spend more than you earn you are creating financial problems for yourself.

The good news is that getting on top of your finances and managing your cash flow effectively does not have to be hard. You simply need to sit down, work out your current financial situation and then apply some simple strategies to get your cash flow moving in the right direction again. The key is to be true to your spending – which can be confronting!

Take charge of your debt & savings – anything is possible…….

Debt is part of modern life. It can be used to help you reach your goals, but only when you are in charge of it, not when it is in charge of you. It’s easy to build up little bits of debt here and there that don’t appear to be all that much, but can quickly eat into your cash flow.

A proven way to get on top of your debt is with a budget. Once you see where your money is going, it is a lot simpler to find ways to reduce spending and free up cash for potential savings.

Did you know?

  • There are over 16 million credit and charge card accounts in Australia, with a total credit limit of $146,779 million.¹
  • As you can see from the below table interest rates vary depending on the type of loan you have.²

A matter of interest

Even when interest rates are low, you could be paying a lot more than you think. The range of interest rates across different loans and credit cards can be substantial.

Case Study: Meet Marcellina


Marcellina is in her early 30s and earning a good salary. She wants to get her finances in order, start saving for a house and make the most of investment opportunities.

Currently Marcellina:

  • Has a credit card with a debt of $4,000 at an interest rate of 21.50% pa. She uses her credit cards to pay general expenses and entertainment, but doesn’t repay the full amount during the interest-free period and is now behind on the repayments.
  • Owes $24,000 on a personal loan payable over 5 years at an interest rate of 8.59% pa, which she took out to buy a car.
  • Has $10,000 in a term deposit which she calls her savings money for her own home. She has been reluctant to use this money to pay off her credit card debt.
  • Had $29,000 in a first home savers account which is now sitting in a cash account. She has been reluctant to use this money to pay off her credit card debt.
  • Pays most of the payments on her credit card.
  • Holds 34 BHP shares offering little diversification.
  • Has a HECS debt of $17,604 she is currently funding from her cashflow.


Marcellina speaks to her financial adviser about getting her finances in order. Her financial adviser advises Marcellina to create a budget.

  • Marcellina uses a simple budget adviser to work out her current incomings and outgoings or cash flow. From the budget adviser, Marcellina discovers that her income is enough to cover all her expenses and some discretionary spending. The annual overseas holidays put her over budget with interest accruing each month on her credit card and her general expenses are high and missing items.
  • After talking with her financial adviser, Marcellina realises that using her savings to pay off credit card debt is an efficient way to reduce it.  She uses $4,000 from her First Home Saver Account to clear her credit card debt. She then cancels her credit card to a visa debit card to ensure she is now using her own money. The money that Marcellina used to pay off the interest on her credit cards is now going towards savings and investment purposes.
  • Marcellina has a new budget comprised of savings, expenses, and discretionary spending components. Allocating money to each component keeps her on track to stay debt free and staying that way. It also gives her an opportunity to start saving for her future.
  • Marcellina has started an investment fund using the remainder of her First Home Saver Account. Her distributions will be reinvested to take advantage of compounding returns over time enhancing the potential growth of the portfolio.
  • Marcellina has set up various accounts to help with her various goals including having sufficient savings for an emergency if she is unable to work for an extended period of time.
  • Marcellina has started saving for her retirement early by making small contributions into super to help build her superannuation account.
  • Marcellina has now started to realise there is good debt and bad debt and uses her money more wisely.

Investment Strategies & Timeframes

Consideration should be made for all types of saving and investment time frames:

Time frame Investment Goal
Short term (1 – 3 years) – Car

– Holiday

– Household needs (washing machine)

– Emergency fund

Medium term (3 – 5 years) – House deposit

– Extended work leave

Long term (5 years +) – Retirement

– Children’s education fund

Talk to your financial adviser about:

  • Creating a realistic budget.
  • Paying off a higher interest product faster.
  • Reviewing your debt on a regular basis to ensure you are making the best choices.
  • Keeping on track in the short-term for a healthier financial future
  • Starting a savings and investment program for various timeframes

At Blueprint Wealth, we offer financial advice that is right for you, no matter what stage of life you are at. Contact us to set up a plan that is right for you.

1 Reserve Bank of Australia, C1 Credit and Charge Card Statistics via figures as at September 2015.
2 Reserve Bank of Australia, F5 Indicator Lending Rates, via figures as at October 2015.

Peta Winkless is an Authorised representative and credit representative of Blueprint Planning Pty Limited (ABN 78 097 264 554), trading as Blueprint Wealth; Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licensee.

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.