Making a cash flow budget

A cash flow budget projects what money you expect to come in and how much you think you’ll spend each week and when you expect the expenses to occur. It’s different from a regular budget because it breaks your monthly budget down week by week. It accounts for when money and other financial resources are expected and when they must be used on needs, wants, and obligations.

The first step in making a cash flow budget is tracking your income and expenses. Ideally, you should do this for an entire month. You can use the “Income tracker”and the “Spending tracker” on the financial worksheet page to get started.

Once you’ve completed these two tools, you can use the “Creating a cash flow budget” tool to help you bring your income and spending information together and show you how they interact with one another from week to week.

Analyzing your cash flow

A cash flow budget can help you identify where you’re falling short each week. It can help you figure out if you have the financial resources on hand to cover the most important expenses—so you don’t fall short covering the rent, for example. A cash flow budget can also help you target areas where you can cut back or postpone expenses.

For people who have irregular, seasonal, or one-time income, a cash flow budget is even more important. It can help you plan ways to spread the income you receive over future weeks or months when you don’t have money coming in. Take a look at your total income and benefits and your total expenses for each week. Do you have enough to cover all of your expenses each week? Are there things you can adjust or postpone so you have enough to cover your needs each week?

Improving cash flow

There are several strategies you can use to improve your cash flow. You can make sure you have the income and benefits at the right time by avoiding large periodic payments. Instead, make smaller payments throughout the month or year.

You can also try to change the timing of when you pay your expenses. For example, you may be able to change the due dates of some of your bills or loan payments, so that they better match the times of the month when you receive income.

Brainstorm some strategies for how to keep your cash flow positive each week. That may mean cutting expenses or changing the timing for when some of your expenses happen.

There are expenses, such as rent and your car payment, which you cannot easily reduce. These are commonly called fixed expenses. Cutting back on these expenses requires major changes, such as moving or selling your car. You can work with your landlord or lender to adjust when these expenses are due, which can improve your cash flow.

Coming up with strategies for to improve cash flow is one thing, but you must be quick and able to put them into action. Lay out your income and expenses on a calendar to visualize your cash flow and make adjustments. Your cash flow budget is about setting targets for how and when you will spend your income going forward. It’s important to be realistic when you set targets and focus on the things you have control to change.

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