I am seriously pooped ……………very busy day that started off at DS1’s school for most of the morning. Nothing serious – just some teenage hot-heads who need a few boundaries and a few slapped legs LOL
I am convinced my low energy is not only to do with the broken nights sleep i had last night – but also because today was one of those “never really getting light” kind of days that we have at this time of year. Honestly this afternoon I felt like hibernating which is not such a good plan.
However I have been getting loads of messages and emails about the cashflow forecast spreadsheets ………….. I can’t believe an excel spreadsheet has got light-bulbs popping all over the place LOL. Actually I am tickled pink that it is helping and that it has shown so many people just where the dips in the month are and how to avoid them. Days like this I truly love working with you guys….. even if my computer has been acting up and I have been unable to comment for the last few days!!!
So – what is tonight’s challenge? Well I know that quite a few have jumped on in and started slotting your expenditure’s into the other side of the spreadsheet …………….. so that is where we are heading tonight.
Now – same rules apply – best guesses as to dates and amounts are what this is all about to begin with ………………… don’t get hung up on perfection ……………..done is good enough. As you move through the month you can replace your best guesses with accurate numbers and then budgeting becomes much closer
Besides – you do this and you a massive jump ahead of everyone who just lurches from pay-day to pay-day ……………. you will know exactly what your money is doing at any one point during the month and be able to anticipate any squeaky points.
First thing to do is slot in your “Opening Balance” – so the actual balance of your account today in the column for today. That gives you a number that will ripple forward adding all the incomes and subtracting all your expenditures to show you the actual balance of your account on any given day.
And of course what you are aiming to do is to create a month where you NEVER end up with a negative amount in the back – where you have run out of money. To do that you may need to jiggle expenditure around – set DD’s till after payday, delay shopping until the next spot of money comes in, reduce pocket money for a few weeks ……………….. the good news is that this spreadsheet will do all the calculations for you and allow you to play around with different scenarios until you find the perfect balance.
So the expenditure categories I have set up are these ………………. but feel free to change them to suit your family …… no two family’s are the same and no two spreadsheets will end up looking the same after you have tweaked them to fit.
And last ……………. but NEVER least!!! What does it cost to keep you on the road – how much do I pay to keep Hermione living with us??
When you have all your expenditures plotted for your month you now need to look at where the bottom line shows a negative number and start moving payments around until you find a pattern that fits. A way of spending that doesn’t put you overdrawn at any point.
If you pay a monthly bill (say on the 15th) but it would suit you better to have it paid on the 30th …. very often your supplier will move you immediately after you have paid one bill and you get a six week grace period before the next one is due. You don’t “save” money but you make it more convenient to pay when you have available funds. Besides you know me – if you don’t ask you don’t get!!!
This spreadsheet is about taking control of the money flowing through your life ………… and some of that will be controlling when some bills get paid too.
“A budget tells your money where to go – not track where it has been”
So you have now got your cashflow forecast – plotted your income and plotted your expenditure (Except your debt payments)
Now hopefully your basic budget now balances …………….. meaning you have more income than you spend and the balance can be used to get you out of debt.
So slot in the minimum payments you need to make on every debt …………. not a penny more than the minimum gets paid till you have built your Baby Emergency Fund of at least £500. Once that is done you can start either overpaying your smallest debt …. or saving up your money in your Squirrel Account in order to make a full and final payment on the debt and get it closed off. Then – same routine – on to the next smallest debt and get it cleared as soon as you can.
But now you will be able to see the spare money in your budget very clearly – and in trasfering it over against your debt you can see how that ripples through and affects your cashflow for the rest of the month. Finally you can see what you have spare for debt repayment without leaving yourself short for food in week four of the month.
BTW – if you don’t have any money left for debt repayment you may be in Debt Crisis and you should really think about taking some advice from one of the reputable Debt Charities – hop on over to MSE and you will find them listed.
Whew – that was a bit of a mega post – sorry about that!! This is the basic tool that I use when pulling apart peoples finances to come up with a workable plan ….. once it is set up it takes moments to tweak …. so I encourage you to take some time to do so. Being in control is such a wonderful feeling I can tell you.
Back on something short and sweet tomorrow – cos this evening is a “proper” piece of homework isn’t it?? Sorry about that my lovelies – and if you get stuck – ask away and we will try and answer all your questions as fully as possible (those I can’t answer I am sure our Accountants can LOL)