Making your cash management plan balance to ZERO (goal setting) is the next step in building a cash flow management plan in 30 days. This can be done after you have followed these steps:
- Determine why you want to create a plan
- Gather data over 30 days to determine where your money is going
- Categorize the data and come up with a grand total of expenses and income
Before you start using fancy software, I recommend that you use a plain sheet of paper or use a a monthly cash flow plan form. At the top of the page, of a blank sheet of paper, write down your monthly net income.
Next, write down all of your categories, try to keep categories in their proper groupings (i.e. groceries do not belong with transportation). Based on your data gathering. Don’t forget to write the amount you expect to spend next to each category.
At the bottom of the page, total up all of your expenses. Subtract this number from your income. If the number is not ZERO, then you must make adjustments. These adjustments should be based on priority. Make sure you have the food, clothing, transportation, and shelter covered.
If you have an irregular-income-planning (small business, commission), use your lowest month over the past year. Then prioritize and spend your money on paper until you get to ZERO. Any categories that remain should be categorized by priority. If your income happens to be more than budgeted for the month, than you can begin applying those categories against the surplus until you get to ZERO.
If you are married, it is vital that you both work together and COMPROMISE. If you are single, find a friend you trust that will be straight with you.
Question: Which step has been the most difficult for you so far?