Cash Flow Analysis
The first step in budgeting for the future is looking at the amount of cash received and the amount of cash paid out. This is a cash flow analysis.
Begin by setting up a cash flow worksheet and gather information on income and cash over the last 6-12 months. Try to think where every dollar goes and write it down. If you can't figure exactly, guessing is fine.
Here are some things to consider:
Income Examples: Salary, unemployment income, interest, alimony, child support, etc. List income you receive after deducting taxes for a more realistic view of what you have to spend.
Cash Expense Examples: Reoccurring cash expenses, which vary little month to month, include rent, utility bills, child support expense, credit card payments, loan payments and insurance premiums.
To help you track cash expenses more easily, you can create categories such as housing, food, saving, debt repayment, clothing, household operation, transportation, medical, entertainment and miscellaneous.
- 1. Begin by filling in how much you spend in fixed categories from memory.
- 2. Start to collect information from credit records, receipts and checkbooks. Look over records for the previous month or two to establish basic spending totals under broad categories.
- 3. Establish your own categories as you go along. This will help personalize your budget.
To help you get started tracking your expenses simply download this cash flow worksheet.
