Kavan Choksi Answers: How Can You Gain Financial Liquidity?
It's important to have a good liquidity ratio when managing your money. According to Kavan Choksi, this ratio shows how well you can handle immediate money needs without hurting your overall financial health. Whether you're working on your career or running a business, improving your liquidity ratio is like having a safety cushion for unexpected money surprises. Here's an easy guide to boosting your ability to handle quick financial needs.
Set up an emergency fund.
Kickstart your journey by setting up an emergency fund. It is a financial safety net to handle unexpected expenses like medical emergencies or sudden repairs. Aim to stash away at least three months to half a year's worth of living expenses in an easily accessible account.
Reduce non-essential expenses.
Evaluate your monthly expenses and point out areas where you can cut back. Kavan Choksi says that you can redirect those funds toward boosting your liquidity by slashing non-essential spending. Consider creating a budget to track your income and expenses more efficiently.
Be investment-savvy.
If your assets are tied up in long-term investments, Kavan Choksi advises diversifying your portfolio. While stocks can offer significant returns, balancing your portfolio with more liquid assets like bonds or money market funds provides quick access to funds when needed.
Loan negotiation tactics.
If you have loans to pay, try talking to the people you owe money to. Ask if you can pay less interest or take more time to pay back. It can help you have more money available and make your financial situation better. But be careful and understand all the details before making any changes.
Business efficiency boost.
For those rocking the business world, optimize your inventory management and ensure timely collection of accounts receivable. Regularly review inventory levels and customer payment terms to identify opportunities for improvement.
Explore credit lines.
Establishing a line of credit can be a game-changer during cash flow shortages. However, Kavan Choksi says to use this option wisely and avoid excessive reliance, as it involves interest payments.
Stay agile.
Keep checking how things are going with your money, and change your plans as needed. Life is constantly changing, and so should your money plans. Stay on top of things, and adjust your money moves based on what you need now and what you want to achieve in your job or career.
Kavan Choksi, a business management consultant, shares insights on business, finance, and economics with his readers. Read his posts here.