Having a good overview of your own money is the basis of success, and we don't have to talk about investments. Today we will show you how to improve a little more thanks to the cash flow table. Our Eva created it at the time when she embarked on her first investments. Today it will teach you how to work with it.
Years ago, I bought an investment apartment and I needed to plan when I would first be able to pay the invoices for the reconstruction. To do this, however, I had to calculate how much I would send to the bank for a mortgage and how much it simply costs me to live. Thanks to my understanding of cash flow, I found out that I can plan everything smartly and quickly. When you reconstruct an apartment, you also need to rent it quickly.
If you have a good overview of when money arrives in your account and when it leaves, you will be able to plan expenses and investments much more accurately. And not only "for now" or until the next paycheck, but calmly for half a year or a year ahead. When you open this sample table,you will immediately understand what we are talking about. In the first tab you will find sample cash flow – just so you know what it should look like. In the second tab you will find a clean table in which you can write directly. Save a copy of the document to your disk and start filling it out.
Step 1: Add up all the money
The first step is definitely to fill in the sum of all the money you have. Write down the number in line 4. Add up the income on all accounts, but also the cash that you can find in your wallet (money box, piggy bank). This is your starting point, according to this, the table will begin to count. The ideal is to start on the first day of the month. You may wonder what to do if it's not the beginning of the month? So far, do not worry so much, try to estimate the number approximately or look at the account statement. If the "Total available at the end of the month" box doesn't work out exactly, on the first day of next month, you'll write down the exact sum of your assets in line 4 and start again, and this time exactly.
Step # 2: replenish earnings
In the Earnings section, fill in all the money that will land in your account that month. In November income from employment, you will write down the amount that the employer will send you for work in October. If you run a business and have clients, you will add other types of income in the same way. If you have an investment apartment, be sure to fill in the rental income. Feel free to add more lines. Think of everything you get money for. Although it will be a contribution from parents or a sold jacket on Vinted.
Step # 3: replenish expenses
First, focus on Regular (fixed) expenses. Think of everything you regularly pay – rent, flat rate, but also a multisport. Line 32 will then tell you how much will disappear from your account every month.
Variable expenses are a little less predictable and change frequently. One month you don't go anywhere and save on petrol or train tickets, another time you go on several weekend trips. All this belongs to variable expenses. You can try to estimate them and then calculate the spending every month. For example, I use estimates, searching for every coffee and adding up receipts from purchases would cost me years of my life. If detailista is your middle name, feel free to add up the variable expenses at the end of the month. Don't forget to add rows if you're paying more per month.
Step # 4: investment
In the Investments section, it is nice to plan how much you can put into securities, for example, or how much you can microinvest with us at Investown. I also add the costs associated with the investment apartment. For example, the reconstruction or the purchase of a built-in wardrobe. It includes everything that appreciates over time or that you postpone for the future.
Step 5: How much do I have left?
We're almost there! The last but most important parts of the table await us. There will be no more filling, because the table calculates all this itself. Line 5 shows you total earnings, line 6 shows all monthly expenses. The key Balance shows whether and by how much you are in the plus or in the minus in that particular month. And just below it, you can see an estimate of how you're going to be at the end of the month. Dada!
Step # 6: what to do with inaccuracies?
It's the end of the month and your account amount doesn't match the estimate in the table? If you do not write down your expenses for the crown accurately, you will always discover inaccuracies. If there are small differences, don't worry about it. Are they in the order of thousands? Instead, try to find out where the mistake happened. Maybe you forgot about an expense. Are you asking how to deal with an inaccuracy in the table? As for the small differences, it is enough to write in line 4 at the beginning of the month the sum of what you have together in cash and in the account. With the new moon, you will actually start again and accurately.
Planning is the foundation of success
A carefully filled cash flow table is the basis for the success of every novice investor. Thanks to it, you will always have an overview of what your account will look like at the end of the month, how much you can (micro)invest or what else you can indulge in. Now you have started and all that remains is to return to it regularly and compare it with reality. 🙂