June 04, 2006
monthly cash flow plan
For those interested, here are a few things I learned at our last Financial Peace seminar...I really enjoyed this session, it was filled with a whole lot of information, and there are lots of forms to fill out, etc. The nerd in me really likes that! :)
The lesson was on Cash Flow Planning...because it's very important that you TELL YOUR MONEY WHAT TO DO. You don't just let the money sit around until you need it or want to spend it. You assign it to certain things and then strive to use it as you've planned. Here's a truth: managed money goes farther.
The main thing I want to share with you is the Monthly Cash Flow Plan Worksheet. I found this worksheet very helpful. Of course, it isn't going to be perfect right out of the gate. In fact, he mentioned that it will probably take 3 months to get it down where it's working somewhat well. Most of us don't really have a solid idea of exactly how much we spend on certain things. So it's a process, learning how to allocate your money.
This is a ZERO BASED plan. Meaning you add up your monthly salary with your partner's, and that's the amount you are allocating. Every penny is placed somewhere, until you get to zero. The great part is, along with all those necessary categories like food, housing, clothing, and transportation (and yes, those categories should always be allocated first!), there are fun categories too, like: entertainment, vacation, miscellaneous, and BLOW. The blow category, meaning that is money that you can spend on whatever you want...scrapbooking supplies, a great bargain you just can't pass up, stuff like that. So, there is room for fun in this plan too...
Here's how you use it:
:: This worksheet is three pages long. You'll fill it out, total up each page, and the totals from the three pages should equal your monthly take home money.
:: There are five columns on this form. The first column lists all of the categories that you'll be working with. The second column is where you list the amount of money you are allocating to that category. The third column is helpful in showing your totals for each broad category. The fourth column is where you list what you actually spend in each category for that month. In categories that are on-going throughout the month, I am using pencil...I put a total, and then add to it as we are spending. And the fifth column is where you can determine what % of your take home pay each broad category is using.
:: As you are determining how much to allocate to each thing, you need to take your whole month into account. Don't allow there to be any surprises, if possible. For instance, I know this is June, and that Aspen has a basketball camp at the end of the month. That money needs to be accounted for. I know this month is Father's Day, so there needs to be money for that. Take everything into account, as it will be different for each month.
Trust me, it's not going to be easy. When you are used to just spending without thinking about where the money is going, it's going to be a lifestyle change. When you've got two different styles of money management coming together, it's going to take some adjustment. But when it all gets in order, and the plan is really working smoothely, the STRESS of money begins to lessen. There are no more arguments about where the money is being spent. And that is always a good thing!
Let me know if you actually take the time to fill out this form...I'd love to know who's making changes!! :)