Having a strategic plan is a smart way of managing and protecting your wealth. And irrespective of your age or lifestage, the foundation for any successful approach to wealth management involves cash management.

What’s cash management? It might sound complicated, but the concept is simple: knowing where your earnings come from, and where they go.

If you’re an employee or retired person, then it’s likely that you will have limited control over how much you earn and how you get paid.

Self-employed entrepreneurs have an advantage here, deciding how much they pay themselves, and how and when they do so. This creates opportunities in terms of reducing or minimising tax.

Leaving tax aspects to one side, what really matters when it comes to cash management is what you do with the money once you’ve got it. That’s why cash management is the most neglected area of personal finance.

As a general rule, if you can save around 10% your after-tax in-come then - all other things being equal - you’ll have made a great start towards achieving financial success. If you’re saving a lot less than this it means that you’re putting important financial goals at risk.

Depending on what you want to achieve and where you’re at in life when you set your objectives, you may need to save more than 10% of net income. For instance, you may be in your mid-50s with minimal savings, having just paid off the mortgage, and you’re aiming to retire in around ten years’ time. In that case, you might need to save 30% of net income - but you may well be in a position to do so comfortably.

• Use a spreadsheet or money management software to track your expenses under each main heading. Take our word for it - you’ll be surprised at the patterns that emerge, as well as how much you can save once you see where you’re spending your money. Very few people actually do this, but the benefits are amazing.
  
  
• Remember: making some kind of financial sacrifice today means more money for tomorrow, but the converse is also true. Consistently opting for short-term gratification means that your less likely to reach your long-term goals.

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