Why Cash Flow is Important During Financial Hardship

Whatever the reason people fall upon tough financial times it is never a comfortable feeling and it can seem like there is no way out. If this happens to you there is one vital thing you can do to ease the strain: make an effort to understand your sources of income and where your money is being spent.

Often called a budget planner or an income and expenditure worksheet, this simple tool will enable you to establish the extent of the financial hardship. Once identified, action can be taken to find a strategy to manage the situation.

So how does it work?  It’s quite simple really.

Firstly, all sources of income (after tax and other deductions) is accounted for and added up.  These sources can include such things as wages, bank interest, share dividends, Centrelink payments and rental property expenses.

Next, add up all the things that are paid for in a typical period and then multiply them out to get a yearly figure.  For instance, if the grocery bill averages $200 per week then multiply that by 52 for a total of $10,400 for the year.

Take away the total of the expenses from the total of the income and the annual surplus or shortfall is found.

Increasing the income and/or reducing the expenses will improve the position.  At the very least the completion of the exercise will give clear picture of the extent of the problem.  A professional financial planner may then be able to help develop strategies to alleviate the hardship.

Check out our budget planner in our free online financial tools to get started.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.