budgeting & cash flow

Personal Budgeting & Cash Flow Analysis

Budgeting & Cash Flow

• Cash flow– When you need to

know where money is going

– Analysis

• Budgeting– When you need to

control how much and where money is going

– Planning & Implementation

Budget

Cash flow

Where to begin: Cash Flow

• Determine actual expenditures

Cash Flow

• Determine actual expenditures– Begin with tracking your

expenditures• Receipts, Checks, Bills

Cash Flow

• Determine actual expenditures– Begin with tracking your

expenditures• Receipts, Checks, Bills• Method of Record keeping

required

Cash Flow

• Determine actual expenditures– Begin with tracking your

expenditures• Receipts, Checks, Bills• Method of Record

keeping required• K.I.S.S.

Keep. It. Simple. Stupid.

Cash Flow

• Determine actual expenditures– Use a tool

Cash Flow

Cash Flow

• Determine actual expenditures– Each expenditure should

correspond to a category– Categorize,

subcategorize, sub-subcategorize• Be thorough• Be obsessive• Differentiation allows for

better budgeting• Limit “misc” category!

Cash Flow

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Cash Flow

• Don’t Stop! Keep going– Track everything• Including cash

– Make adjustments as you go• Computerized tools make this easy

Budget• Budget is a Spending Plan.• Series of comparisons,

preferences, judging, weighing of importance

• Subjective decisions, influenced by emotion

• Requires honest and frank differentiation between need and want

• Ultimately about delayed gratification

Next Step: Creating a Budget

• Have a Budgeting goal or purpose– Cut spending– Save for specific

item/event– Find comfort zone

for retirement

Budget

• Begin with actual expenditures– rough outline

• Project fixed expenditures– Taxes, utilities, debt

payments, insurance, etc.

• Additional variable expenditures– Everything you can think

of not already noted

Budget

• Project Income– Overtime?– Bonuses?– Other sources

of income

Budget

• Budgeting Savings1. Emergency fund• 3 - 6x monthly income

2. Retirement3. Project fund• Specific goal

4. Play fund• Reward

Budget• Finding places to cut

– Consider everything • few things are truly

uncuttable

– Obvious places• Dining• Clothing• Entertainment• Luxuries

– Look for Red Flags• Spikes in spending• Impulse buying

• Begin with modest goals– Eg. Increments of 1% of

income

Budget

• Monitor Spending Trends– Use a tool

Budget

Review

Revise

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