Whether you drive their cars or use their computers, most of us will agree that Toyota and Dell are pretty successful companies.

One often suggested way to improve cash flow while continuing to satisfy your business obligations is to have enough stock on hand to cover production needs but not too much where you are depleting your cash reserves.   Referred to as Just In Time (JIT) inventory, this system is utilized by many international companies with Toyota and Dell being among them.   While recently reading a book that discusses this method, I started thinking about how this could apply to not only businesses but individuals as well.

For most of us, our financial challenges resemble those of businesses – cash flow management.   It never seems to flow in as much or as quickly as it flows out!   We would all be in a better position if we could manage the flow of that cash more efficiently.  Now you would probably call me crazy if I suggested that you could improve your cash flow by (possibly) spending a little more on things that you already purchase but please, just hear me out.

It is assumed by the majority that warehouse stores – Costco, BJs – offer a lower per unit price and most of the time that theory holds true.  The question then becomes where is your money is best spent.  Do you really need to buy a 2-pack of MEGA-sized Skippy peanut butter to save 30¢ per jar?   Truth-be-told, you probably won’t use the 2nd jar for 1 ½ – 2 months.   Given that the average credit card debt per household is $14,473, in the same time period that money could be used to pay down that debt (which is accruing interest at an average of 14.83%, much more than the 30¢ you’d be saving).

You are probably thinking, “The $5 I save on my PB won’t do enough good to change my buying habits.”  And you’re absolutely right; I wouldn’t change over a $5 savings either.  But when you factor everything that you may “overbuy” at Costco – 5 month jar of mayo, double pack of XL BBQ sauce, aluminum foil, etc., etc. – this could add up to $50-$100 per trip!