So how did you do with the Spending Record? If you really don’t have a handle on where your dollars go, please go back and see our video, Working With The Spending Record, and then download the free template.
It is essential that you know where your money is going before you can plan where it should be going. This next step is called developing a cash flow plan (see Cash Flow Planning & Budgeting 101 for general information on cash flow planning). Cash flow planning is the precursor to developing a budget and actually feeds the budget lines that you use for your comparison with your actual monthly expenditures.
Today in the video below, we will try to help you better understand how to work with a cash flow template and how to adjust your goals if your income rises (or falls).
The key takeaways from the video and this exercise:
Cash flow planning is a necessary step in budgeting;
A template like ours can be helpful, but this really not rocket science…..it just takes a willingness to be a good steward of your resources and some time.
Prioritize what is important to you first and then learn to live on what you have left. So if your priority is saving for retirement and tithing, deduct those items first.
If your income rises, raise the priority items first. Try not to let lifestyle consume all your increase.
If your income falls, try to adjust your lifestyle expenses first (your variable expenses) and only after you have cut these to the bone should you adjust your priority items (saving and charity).
This plan feeds your monthly budget spreadsheet or Quicken budget line items.
Let us know what you think below. Also please like this video on YouTube.