Cash Flow & Budgeting

How much do you spend each year? How much do you save each year?

If you do not know the answer to these questions; you should. Cash flow and budgeting is at the top of our list for a reason – a detailed budget is the centrepiece of any financial plan.

Once you know how much you spend and how much save you can take control of your cash flow and plan for other things such as:

  • How much you will need to fund your retirement;
  • How much extra you can pay off your home loan;
  • How much you can contribute to an investment, superannuation or a deposit for your first home.

And if you have a negative cash flow, you will be able to adjust your expenditure to ensure you are not living beyond your means.

The best thing about a budget is that you can do one from the comfort of your own home. We have a Budget Template to help you get started.

Cash Flow Management

There are many different ways to budget and manage your cash flow, but the common theme across all budgets is to be disciplined in sticking to your plan.

We generally recommend that you implement the following Cash Flow Management Plan (tip – our budget template will help you do this):

  1. Determine what net income you receive and how often your receive it – this may be a wage, Government entitlements or other income.
  2. Calculate your expenses for the year – this list should be divided into three separate categories (Note – This list should be comprehensive. All your expenditure for the year should be listed and estimated, right down to vet bills for your pets and Christmas presents):
    1. Day to Day Expenditure – These are items that occur every week or fortnight (ie. groceries, fuel and spending money).
    2. Regular Fixed Expenditure – these items occur at similar times each year and are relatively easy to predict the amount (ie. rent, mortgage payments, insurance, car registration, utilities, etc).
    3. Ad hoc Expenditure – These are expenses you know you are likely to have throughout the year, but are unsure when they will occur and are less certain about the actual amount (ie. doctors appointments, holidays, presents, clothes, etc).
  3. Determine how much you need to allocate towards each account, each pay period and have these amounts automatically dispersed between your accounts each pay period. This can be done by getting your employer to pay specific amounts into your different bank accounts or by setting up automatic direct credits. This will ensure you have saved sufficient cash to cover all expenses for the year and not using credit to pay for your expenses.


  • What if you have a surplus? This amount can be directed towards a separate savings account or investment portfolio or additional loan repayments.
  • What if you have a deficit? Unfortunately you will need to adjust your expenditure, otherwise you will accumulate debt.
  • Keep investment and/or business cash flow separate from personal cash flow – you should have a separate budget and bank account for each of your business and investment structures.