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Cash Flow Awareness Exercise

The ultimate goal of cash flow awareness is to have more to save each month.  It’s not about cutting back your lifestyle and scrimping.

The ideal position is to save first and spend the rest.

Budgeting is stressful, so people avoid it.

One of the reasons that it’s hard is that your life is unpredictable, and you’ll have miscellaneous and irregular expenses that crop up, even if you are very intentional with how you spend your money.

Many categories where you have a fixed bill each month, like your cell phone and your mortgage, are easy to plan for.

But many categories are more flexible, with higher spending some months, and periods of time with no spending at all.  This may be categories like clothing, grocery shopping, auto maintenance, and home improvement.

Tracking your income and expenses over time will help to reveal some of your spending trends, making these irregular expenses easier to plan for.  But what do you do when you first get started?

Start with a money tracking tool, like, an online account that will pull your transactions from various banks, accounts, and credit cards into one place and categorize them for you.  Some of the automatic categories will not be accurate, as perhaps one Target transaction should be assigned to grocery, and another to gifts category.

Review your transaction history periodically – ideally, at least once a week, so that you can remember easily what each transaction was for.  You can split transactions into multiple categories of spending or change them to another category.

When you’ve seen your average transaction history for a couple months, it will be easier to set budgets for each type of expense.

For example, you may notice that you spent $20, $280, and $0 for the last 3 consecutive months on auto maintenance.  You could average this and say that you plan to spend $100/month ($1200/year) on auto maintenance.

  • You could budget $100/month every month, with a rollover option, so that whenever you don’t spend the money in a given month, you have more money sitting at the bottom of your checking account and budget to spend for in that category.
  • You could also set the budget to $300, every three months, which will essentially do the same thing, allocate $100/month at the bottom of your checking account for future spending.
  • Another option would be to move $100/month into savings, so the money sits at the bottom of your savings account for a designated future expense that you may not know when or how much will be spent.

The goal is to be able to plan for these expenses, but not get too far in the weeds that you lose sight of your objective.

When you’re proactive in monitoring your spending, you’ll continually be modifying your budget, because you’ll always have different types of expenses and changes with your spending needs.

If you prefer a more tangible way to work through your spending, a spreadsheet with income and expenses by category will be sufficient.  You can print off your bank statements at the end of the month, total your transactions for a category, and then document down the totals for the category on the spreadsheet.  Get your total income, expenses, and the difference.

Income – Expenses = Cash Flow

Subtract your total expense transactions from your monthly income, and you’ll see how much you have left over at the end of the month.  This is much more effective than the typical “bank balance accounting” in which someone checks how much money is in the account to make financial decisions because this leads to problems.

Your cash flow will be either positive or negative.

Positive means you can save each month.

Negative means you need to find a way to make more money.

Until you’re in a position where you know that you can save 20 – 30% of your income and spend the rest freely, being conscious and aware of where your money is going helps you to get into a position of being financially free.

The more you place your attention on something, you’ll experience positive changes.

If you’re looking for a ready-made, customizable, hands-on spreadsheet tool to use to quickly gain perspective on your own cash flow awareness, I will give you the one that we use for our clients.  Email creators at get your copy of the Cash Flow Optimizer.


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Rachel empowers her clients to maximize and control their money so that they can accomplish their dreams and live out their highest purpose. She believes that if you understand the short and long-term impacts of the financial choices you make, you’re better suited to make choices that put you in control of your resources. She helps you discover money flowing out of your control, strategize ways to have more money flowing into your control so that the end result is that you have more money to retain and utilize during your lifetime, and more to pass on to future generations.


Without Giving up Access to Cash