Got money in the bank? Great, but how old is it? The « age of money » refers to the average age of your money in your accounts. The older it is, the better off you are financially. A good age of money gives you a buffer against unexpected expenses, more control over cash flow, and peace of mind. To improve your age of money, focus on increasing income, reducing expenses, prioritizing spending, and tracking cash flow. So, don’t just have money, have old money!
The Idea is That You Have Money Before You Need Money
As an entrepreneur, you know that cash flow is everything. You need money to run your business, pay your bills, and invest in growth. But what if you could have money before you even need it? That’s the idea behind having a good age of money.
What is a Good Age of Money?
The age of money is a concept popularized by budgeting software, YNAB. It refers to the average age of the money in your accounts. The idea is that the older your money is, the better off you are financially.
For example, if your money is 30 days old, it’s been sitting in your bank for 30 days because you haven’t yet had a reason to spend it. And 30 days is an excellent age of money. It means you have enough cash flow to cover your expenses without dipping into your savings or relying on credit.
Why Does the Age of Money Matter?
Having a good age of money is important for several reasons. First, it means you have a buffer against unexpected expenses or dips in income. If your money is 30 days old, you have a month’s worth of expenses covered without touching your emergency fund.
Second, it means you have more control over your cash flow. You can make strategic decisions about when to pay bills, when to invest in growth, and when to take on new projects. You’re not constantly scrambling to cover expenses or waiting for payments to come in.
Finally, it means you have more peace of mind. You’re not living paycheck to paycheck or worrying about how you’ll make ends meet. You have a stable financial foundation that allows you to focus on growing your business and achieving your goals.
How to Improve Your Age of Money
If you want to improve your age of money, there are several strategies you can use. First, focus on increasing your income. This might mean taking on new clients, raising your prices, or launching new products or services.
Second, reduce your expenses. Look for ways to cut costs without sacrificing quality. Negotiate with vendors, switch to cheaper software or tools, and streamline your processes.
Third, prioritize your spending. Make sure you’re allocating your resources to the most important areas of your business. This might mean investing in marketing, hiring new staff, or upgrading your equipment.
Finally, use a budgeting tool like YNAB to track your cash flow and monitor your age of money. Set goals for yourself and celebrate your progress as you improve your financial stability.
Having a good age of money is essential for any entrepreneur who wants to build a successful business. It gives you a buffer against unexpected expenses, more control over your cash flow, and more peace of mind. By increasing your income, reducing your expenses, prioritizing your spending, and tracking your cash flow, you can improve your age of money and build a strong financial foundation for your business.
References for « What is a good age of money? »
- The Relationship Between Your Age of Money and Your Financial Health
- What Is Age of Money and Why Does It Matter?
- Age of Money
- Age of Money: A Metric That Can Help You Better Understand Your Financial Health
- ‘Age of money’: How long should it take to get to 30 days?
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