You can’t build a home if your foundation has cracks in it, how can you build wealth if you have cracks in your cash flow?

High level of debt is a growing problem for Gen Y’s and millennials, but how does this happen at this stage in life, before large expenses such as mortgage repayments, supporting a family and large education expenses are even on the radar?

Quite simply from poor cash flow management, and acquiring debt to satisfy instant gratification of disposable items or life experience such as travelling, without taking into the account the financial impact.

Improving cash flow, their ability to earn an income and the amount they will earn over their lifetime are key components which will help people within these age groups build and accumulate wealth over the long term. Keeping tabs on their cash “inflows” and “outflows”, and spending less than they earn are vital element for Gen Y and millennials.

Focusing on these factors are key to creating a solid foundation into building their wealth.

Use building a house as an example. If the foundation has cracks in it from when the slab is laid, future problems will undoubtedly arise requiring additional funds to fix the problem. Starting with the right foundation is critical.

Having a similar foundation also applies to your cash flow habits. If there are cracks in your cash flow foundation, such as non- deductible debt or spending more than what’s coming in, how will you be able to build and accumulate wealth if you have to pour these funds into debt repayments and unnecessary interest costs, or funding a lifestyle you cannot support?

Applying strict budget restraints is not always required to setting the foundations right. The right foundation is built upon:

  1. Having a full understanding of your fixed costs.
  2. Setting aside funds for a lump sum expense such as a home deposit or an overseas trip (savings).
  3. “Play” money; an allocation from your income which you can dispose of within your cash flow limits.

It is more than likely cash flow will be tight and constricted for Gen Y’s and millennials to provide the funds necessary for items 2 and 3. They’ll need to decide what is more important to them over the long term: saving for a lump sum expense such as a home deposit or overseas holiday, or instant gratification like drinks at the pub and designer clothes. Self-compromise will also be required as to when expenses such as item 2 can realistically be achieved without having to live off baked beans.

A financial planner can assist in setting the right cash flow foundation together with Gen Y’s and millennial clients, ensuring they remain on the right track and establish good habits and accountability to achieve long term wealth generation.

Just like seeing a personal trainer, you can’t see them once and expect to the see the results instantly and continuously. A training expert will keep you on track and give you tips on how to improve your fitness or achieve your goal weight. The same applies to a financial planner assisting you to generate wealth over the long term, and regular catch ups will ensure you are on the right track, maintaining good habits and receiving additional tips along the way. These factors will help you generate wealth over the long term.

If you would like further information, please email me at


Disclaimer: Jess Lewis and HLB Wealth Pty Ltd are Corporate Authorised Representatives of Paragem Pty Ltd ABN 16 108 571 875, Australian Financial Services License 297276, Level 15, 115 Pitt St, Sydney NSW 2000.