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How to create a cash flow plan - budgeting basics


"A budget is telling your money where to go instead of wondering where it went." -John Maxwell

Budgeting is one of the tools needed in financial planning. It is writing down what you have today (income and expenses) and spending your income on paper before the month begins.

make a budget plan
A lot of people have tried budgeting or cash flow planning but have been disappointed because it didn't work. Here are some reasons why budgeting don't work:

1. Leave things out - every thing should be laid out. Every tiny detail of expenses should be taken into consideration. Else, a small hole/leak can sink your financial ship.

2. Over-complicated plan - budgeting don't need to have a 10-sheet excel file that includes assets and liabilities. It should be simple.

3. Don't actually do it. Enough said.

4. Don't actually live on it - sometimes we are just good in starting (made a cash flow plan) and when the month begins, we don't follow the plan.

A simple cash flow plan is just based on the 10-20-70 savings formula. Here's a sample cash flow plan:

Net Income: (please,don't mind your gross income, taxes and deductions aren't our money anymore.)

Love/Give Fund (10%): - Tithes - Offerings

Savings Fund (20%): - Emergency fund - Retirement fund

Expenses (70%): - Food - Rent/Mortgages - Utilities (Electricity, water, phone)
- Clothing  (Personal, Children, Laundry)
- Transportation (Gasoline, Fare, Repairs and Registration)
- Medical/Health (Medications, Vitamins)
- Insurance (Healthcare, Life Insurance, House and Car Insurance)
- Personal (Cosmetics, Books, Pocket Money, Entertainment)

Below is an interactive cash flow plan. This is just a recommendation and one may edit is as he sees fit. The give fund and savings fund are fixed (one must strictly follow it) and one must learn how to manage what is left for expenses:

the below cash flow plan may not work on mobile. you can also choose to download it as a reference or template. 
Does it look complicated? Scary? Sometimes yes. Because this just shows that we really have a lot of things to spend on and if we miss an important detail in budgeting, that is when people go into debt. Lay down everything, take them into consideration, know if you are overspending and the truth shall set you free.

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