Don't Skip the small stuff

Unfortunately, many affluent investors overlook this key element of their financial planning. They have the mistaken notion that the only way to achieve their financial goals is through good old-fashioned belt-tightening - that is, by saving a few rupees here or there on small-ticket items, like their morning tea. But cutting back on life's little pleasures is not the purpose of financial planning. Which is why your focus should be on applying some of the same cash-flow management strategies and tactics that successful companies use. Focus on making smarter financial decisions relating to the big-ticket items - taxes, debt management, real estate and automobiles, to name a few. Cash management in these areas can often translate into several thousand rupees in savings per year - savings that can then be plowed back into your portfolios.

Careful management of even your simplest financial transactions can yield substantial savings. When it comes to bill payment, for example, many people don't take advantage of the opportunity to earn money on the cash they earmark for their monthly expenses. These payments - particularly home and credit card expenses - can be thousands or even tens of thousands of rupees. Leave the money in your savings account or a liquid fund until you really need it. Earning even a small percentage of interest on these amounts can add up to a surprising amount of inevitable cash over time.

Skills to Pay the Bills

A good cash-flow management approach to bill paying is simple:

Think timeliness - don't pay too late, don't pay too early, pay just in time: You can profit from the "float" - the period of time before the absolute due date of a bill, when money you owe can be earning short-term interest. Keep the cash you will pay out in an interest-bearing money-market account, rather than a non-interest-bearing checking account or low-interest savings account. Infact in days of online bill paying, one can even transfer funds from money market to checking just in time to cover written checks or electronic bill payment account transfers.

Synchronize your monthly billing cycles: Get your credit card companies, phone company, etc., all on the same payment schedule, so you don't have to keep track of a handful of different due dates for your bills. Then you'll only have to transfer funds from money market to checking once a month. In case you have large monthly expenses. To take advantage of the timeliness principle, make sure that you are not losing money by making payments too late. Save on the late fee charges.

Also learn how to make money from your float. Parking your monthly budget in an interest-bearing account at, say, a 4 percent return, and coordinating "just in time" bill payment could result in substantial earnings income which was otherwise being thrown away can now be reinvested in the client's portfolio.

Also a clever way of keeping your credit card bills down or rather staggered is to check which is the last billing date in every statement and then instead of the beginning of the month to the end of the month use those dates (say the 5th of every month) as the 30 days within which you will be billed in the next credit card. In case you buy something after the last billing date (say the 6th ) then you will be billed in the next to next statement.

Prioritize your spending

We want all kinds of things and we want them now. But hang on, before you take off on the spending spree, make a list, see what you can postpone till next month, some items may be cancelled altogether and you will end up with a much shorter list. Time your purchases with sales, discount offers, you will see the substantial savings which will ensure that you are never out of cash.