Objectively calculate the cash flow

Set up or calculate cash flow for some people are a dizzying job. They felt that they already set up their finances as detailed and as tightly as possible, but always end up outside the estimates and expectations. In fact, even though some are having eight digits earning, but they are complaining of its value that they never felt since it is always slowly end up with expenses.

Indeed, managing cash flow is not as easy as imagined. Not as simple as just a few thousandths of money in and money out so, then the rest can be used for saving or investment.

To simplify the setting of cash flow, try to divide the various expenditure items into several specific groups: Primary Expenditure, Obligations Expenditure, Secondary Expenditure, and Investment / Savings. Classify each of your expenses heading into the groups.

Primary expenditures are specific group for various expenditure items relating to support productivity and daily life. Expenditure items are classified into this group is usually vital. When you have to cut the budget of this group, then the continuity of your daily life will be disrupted.

For example, the monthly expenses for food needs. Imagine if you had to cut the budget so that you or your family change the feeding schedule of three times a day to just two or one time a day.

Obligations expenditure is specific to group expenditure items relating to your obligations to third parties. This is a sensitive group of expenditures because of its sensitivity to relationships with others.

For example: the salary for housemaid and driver. This expenditure should be made to meet your obligations to them. If not met, perhaps they would revolt and then quit his job. Automatically, you will have difficulty because of you need to do all those homework by yourself. Such expenditure is included in the group of obligations expenditure.

Secondary Expenditure group is a specific group for various expenditure items that are not associated with the two previous groups. Expenditure items that go into this group are private and have no significant effect for your daily activities.

For example: the need for entertainment or hobby. If you have a routine spending for a movie at the cinema every weekend with your partner or family, then it is inserted into a group of Secondary Expenditures.

Expenditure group for savings and investment is specific to the needs of savings and investment. If you have a personal financial planning and routinely doing investment, then those expenses are inserted into this group. For example, if you have a regular investment spending for pension funds, then this expenditure items included in the group of Savings and Investment Expenditures.

If you feel you have never had a residual income, then the Secondary Group can be re-examined. Make an objective assessment of that various expenditures. If you feel you cannot objectively, you can ask your spouse or best friend. If they say the budget on certain items are too big, then you need to make reasonable adjustments.

No harm in asking their opinion on a reasonable budget, so you will have a comparison in adjusting the amount of expenditure.

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