My Monthly Spending Plan

Using a cash flow guide to manage finances

Managing your money can feel overwhelming, especially when living on an income that fluctuates from month to month. This publication introduces a cash flow calendar you can use monthly to plan for bills, track income and expenses, and make smarter financial decisions.

What is cash flow budgeting?

"A cash flow budget is all about tracking the timing of your income and expenses to make sure you have enough from week to week" (Consumer Finance Protection Bureau 2020).

This type of budgeting is especially helpful if you have an irregular or unpredictable income. A cash flow method allows you to put money aside during prosperous times for expenses that come up during times of less income.

Using a cash flow calendar to budget helps you anticipate your spending and prepare for periods of shortage. This allows you to take action to avoid financial stress and stay on track with your financial goals.

To begin, you will need a few basic supplies:

• Three colored pens—red, black, and blue
• One pencil

Next, follow the steps below to set up and use your cash flow calendar. A blank calendar has been provided for you to fill out as you work through these steps.

How to use a cash flow calendar...

1. Write the name of the month and year in the space at the top left of the form.
2. Write any money being carried over from the previous month at the top right.
3. Write the numbers in the small squares to match the dates of the month.
4. Using black ink, write the amount of your expected net income on the dates that you get paid.
5. Using red ink, write the amount and the name of the expenses or bills on the due date for that month.
6. Using blue ink, write the amount and the name of the periodic expenses on the due date for that month.
7. Examine your cash flow to see which bills you will pay from each pay period. Use a pencil in the My Notes section on the right to record your expected income, list your expenses (including periodic expenses), and subtract them to determine how much money is left over. This will help you determine if your income covers your expenses. Remember to use carryover funds from the previous month as well to pay bills that are due early in the new month.

Use the tips below to strengthen your budgeting habits and look for areas to save money throughout the year.

Tips for managing money:

• Assume the lowest monthly income when calculating a cash flow calendar.
• Monitor all outgoing expenses.
• Prioritize essential expenses first and then determine how to use leftover money for nonessential items and paying down debt.
• Identify fixed and flexible expenses and make modifications where possible. (Flexible expenses tend to fluctuate every month and are an area to identify potential savings.)
• Open an emergency fund savings account for unforeseen expenses.
• Account for periodic expenses such as holidays, birthdays, and vacations.

Everyone makes mistakes with money, but everyone can learn to be a wise money manager and stay within a spending plan. Start today!

Reference

Consumer Financial Protection Bureau. 2020. "Your Money, Your Goals toolkit." United States Government.

Prepared by: Christina Pulman, Penn State Extension educator in Lackawanna County.

Originally written by Cathy F. Bowen, former assistant professor of agricultural and extension education and Rebecca Escott, former extension educator, Penn State Extension in Lehigh County.