November 30, 2022
Experts share DIY financial tips to help with cash flow

Experts share DIY financial tips to help with cash flow

A July Bank of America analysis of its non-business bank accounts suggests that a number of its customers tapped reserves this spring.

The study, which only sheds light on a partial snapshot of consumer finances — based on the first quarter of 2022, and looking at the bank’s own customers — found that around 20 percent of customers saw a net loss, depositing 85 cents or less for every dollar they took out.

Interestingly, higher-income people were more likely to have this gap between their income and expenses. While the report didn’t include data on where money was headed, David Tinsley, a Bank of America senior economist and the report’s author, said people with higher incomes might be funding investments or paying for things while counting on a bonus. They also tend to be older, so they might be paying for college or have large house payments. For middle and lower-income families, incomes go more toward housing and basic expenses, and as those costs rise due to inflation, their budgets get stretched.

It’s also not clear if these account holders are regularly tapping savings or if the months that were studied mark a shift. But, Tinsley added, having this kind of data is a starting point. “If someone’s outgoings are more than their incomings it at least makes you want to ask why this is the case and whether it’s sustainable,” Tinsley said.

Greg McBride, chief financial analyst at the personal finance website Bankrate, said anyone who’s overspending or having trouble saving should audit their expenses to get their own data.

“That’s a fundamental starting point for someone who is running out of money before they’ve run out of the month. You have to know where the money is going,” McBride said. It’s a good habit for everyone, he added.

For people with some disposable income, McBride shared some tough love about rethinking spending patterns at a time when needs cost more, and there’s less money left for wants.

“Just as it is a lot more fun to eat what you want, when you want and not have to count calories or restrict your intake, it is a lot more fun to spend freely and without a care in the world than to track spending and say ‘no’ to yourself on things you want,” he said. “But discipline is a necessary ingredient to success — whether it is finances, diet, exercise or anything else you want to be successful at. That is easier said than done, and that’s why not everyone does it.”

Bankrate has a budget calculator that can help you piece together a detailed snapshot of your monthly income and expenses.