Happy holidays, everyone! It’s been a stressful and restful week starting with last-minute Christmas shopping and dinners and ending with oversleeping this long chilly weekend. I hope you had a great time this season too and got to spend it with important people in your life.
Since work is also pretty chill these days, it allows me free time to have a look back at my goals this year and also prepare for the year to come. I have a goal board I’ll share with you some other time and, of course, I have an excel file for most of my finance-related stuff. Haha! I’ve been reviewing these and jotting down notes for what I want to challenge and change for 2017. So far, I’ve got a good list already and will just need to clean it up and specify the timing, how it can be done, etc..
Along with mine, I’m also done doing cash flow planning for 2017 for H. Aside from what we did during the last exercise where we assessed her current funds and re-allocated them effectively, we’ve also looked into her next year’s cash flow to determine how she needs to manage her cash for spending, saving, and investing. And these are all aligned with her plans for 2017 as well.
Since I’m not comfortable sharing mine with you (I’m already sharing my net worth with you every month!), H has agreed to share hers instead to guide you on how it’s done and I do hope you start doing it as you mull over the remaining days before the new year.
I’ve been sharing this spreadsheet to people I know and have come to talk to from being a Financial Advisor. I think it’s great for people who have not yet tried to do a budget of their own. Also, it’s really pretty and smart. Haha. I’ve already forgotten where I got it and just recently re-searched and found that it was actually an MS Office template. *facepalm* Typical story of not maximizing the stuff we have until we accidentally find it. Here’s the link for you to download it: Generic family budget.
It’s easy to use and can be customized depending on the buckets you want to include in your budget. For this example, we’ve done quite a lot of changes in the basic template to fit H’s financial flows.
Exhausting all sources of income
The first step in optimizing your cash flows is to exhaust and note all sources of income. You may think it’s easy but it’s not. Honestly, it’s easy to forget you received money when you miss to expect it. And usually, it gets spent before you even put it somewhere useful. I, too, have been through this a couple of times to know.
So here, we’ve detailed H’s monthly salary and allowances net of tax, her 13th and 14th month, her performance bonus, and her income from renting out her parking space and condo, as well as from driving with Grab part-time. It is also important to note at this point to be sure the timing is also accurate.
A good thing about H’s sideline with Grab is it acts as a variable source of income for her – meaning, she can choose to lie low at some months or work extra on other months when cash flows are tight. If you have a variable source of income too, it can work incredibly by adding flexibility in your finances.
Deducting your expenses
I’ve mentioned this before that I’m not a believer of saving first before spending. There is a minimum amount you need in order to have a quality life and knowing your expenses first also gives you the power to adjust as necessary.
H is pretty thrifty when it comes to daily expenses. She’s okay with eating from karinderyas or silogans. She rents a place a trike and a jeepney ride away from work along with 5 other people. The place also comes with parking. She has a lot of mortgages to pay though having a condo and a car. And I just realized this now that we’ve laid it all out that the other charges for having a car is quite expensive.
Aside from the regular things that she pays for, we have to take into account the one-offs throughout the year. These can be big purchases for gadgets, educational obligations, or planned travels.
Compute for savings and investments
H has started her emergency fund this year (hooray!) from our last exercise. We’ve saved up 3 months worth of her essential expenses. In 2017, we plan to augment that fund to cover for at least 3 months of her condo and card mortgage payments too, to have it at a more healthy level. She should end at Php150,000.00 in emergency fund by the end of the year.
We’ve included in her cash flow to restart her SunLife FlexiLink VUL as well. She has unfortunately stopped paying installments for the recent years due to a tight budget and lack of awareness on how it has been performing. I’m glad I’ve somehow helped her to revive her policy.
Her year will start with a good cash flow from the payout of their company’s performance bonus. However, for February to April, it will be a bit tight so she has to save up whatever she has in January to cope through those months. May will also have a good cash flow from payout of half of their 13th and 14th month pay. And then it’s negative again until August. September until the last quarter will be cash positive again and net full year, we expect H to have an excess cash of Php95,125.00 aside from those which we’ve already set aside for emergency fund and VUL. She could definitely re-allocate this in the plan again by maybe getting another investment in Q4.
There you have it! It’s been a lengthy post and but I promise it’s much more exciting to do the worksheet yourself. *wink* So that’s my wish for you in the coming new year. Let this be one of your resolutions and may it help you have a more fruitful 2017!