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This is a question that both businesses and individuals need to answer. Some people I’ve run across focus on creating tons of cash that comes in and almost ignore how much they spend. Others focus on where they spend money and don’t focus on how to create more money in the first place.

I find that most people I run across focus on one or the other, but not both. I hope you’re not one of those people.

Cash in is about creating a product that people want.

If you own a business, you know what I’m talking about. It might be the world’s greatest sandwich or it might be a product that that an advisory client would want to buy from you. In both cases it’s about creating something that others believe they need to have in their life.

What about if you don’t own a business? What if you just have a job? If you think that your job is limiting in what you can earn, then you’re in trouble. You need to think about yourself as a product.

After all, aren’t you selling your services to the company you believe is the best fit for you? You need to think about you just the way a business owner thinks about their products. Are you doing everything you can to make yourself more attractive and valuable to the company you work for?

If the answer is no, you’re going to be stuck where you are.

What you spend is about affordability.

If you focus on cash out or what you spend every month, then you are working from a scarcity mentality. You think there is only so much in the world and you have to hoard whatever it is you have.

This attitude towards wealth is one that will keep you depressed and stuck.

I’m not saying you should go out and be a spendthrift. I am saying that you need to think about smart spending and ask if the money you’re spending makes your life better. If the answer is yes then great. If there’s not enough then read the section above and make yourself or your products more valuable to those who consume them.

For me creating cash in is much more fun.

I like to focus on creating cash and have always believed that my spending would take care of itself. When I was younger this attitude almost put me in bankruptcy.

Let’s face it spending without thought is fun, at least for a while; then you have to start paying bills that you’ve created. You don’t want to make monitoring your spending a punishment. You want to make it something that you know leads to a better life.

Too much focus on one or the other will get you in trouble.

For me, the trouble was only focusing on cash in. In fact, it almost put me out of business. My first three years in business were lots of fun. We were growing like crazy and the bank seemed to be willing to lend me money for anything.

Then reality set in and I learned that all of that money I had borrowed had to be paid back. The fact was the bank wasn’t willing to loan me all of the money I needed. They expected me to actually provide lots of funding for my business from profits.

Well, I had profits, but my cash needs outpaced my profits. And I was on the verge of running out of cash. That’s where I learned that only focusing on cash in was a really bad idea. It’s where I learned that paying attention to where I was spending cash would be necessary……that is if I wanted to stay in business.

The truth is you need to focus on both.

Like all good things in life balance is what you need to focus on. You don’t have to do a 50/50 split on both but you do need to spend a significant amount of time focusing on both.

In my case I spend about 70% of my focus on creating cash and about 30% of my time managing the cash I’ve created. This seems to be a balance the keeps me financially solvent and provides the most joy in my life.

What about you? How much time do you focus on each? Why don’t you send me an email and let me know.

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Topics: cash flow management

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