How My Cash Flow System Began Over 20 Years Ago

In 1998, I started my cash flow system and have been using it ever since. You can also benefit financially from adopting my cash flow system.

In the fall of 1998, our money situation was becoming very tight. Six months earlier, I had started a new job with tremendous upside, but with a $20,000 base pay cut. My thinking back then was no matter what happens, I better make sure that my school, county, and occupational taxes, along with our life and disability insurance premiums could be paid. In order to accomplish this objective, I started my cash flow system.

A Separate Bank Account For My Recurring Expenses

To accomplish my goal of making sure these recurring expenses could be paid, I decided to move a certain amount of money each pay period into a separate bank account. The money in this bank account would only be used for these recurring expenses. This process became the foundation for my cash flow system.

The Need To Track My Cash Flow

Once I started transferring money for my recurring expenses into a separate bank account, I needed to compare the cash flow into the account against the cash flow out of the account. Given 1998 technology at the time, I simply used a Microsoft Excel workbook to track the activity in the account. After 21 years, I am still updating the same workbook. I have added a few columns over the years and now have over 800 rows of entries!

• How to calculate your monthly recurring expenses
• How I reconcile my recurring expenses monthly

Below Is My Cash Flow Workbook From 1998

Allocating My Beginning Balance

Based on the cash flow workbook above, Column B / Row 6 shows I had $507 in savings on 10/31/18 and allocated $240 to occupational taxes, $80 for my life insurance, $25 for my wife’s life insurance and $162 to disability insurance.

Determining How Much To Deposit A Month

Next, I needed to deposit $453 monthly to this account to meet these fixed expenses. Row 7 (and subsequent deposit rows) shows the $453 was spread as follows: $250 for school taxes, $60 for county taxes, $20 for occupational taxes, $80 for my life Insurance, $25 for my wife’s life insurance and $18 for my disability insurance.

Recording The Payment of Recurring Expenses

When paying a bill, I entered a negative amount in the appropriate cell and formatted the cell to be red and bracketed. Column L / Row 14 shows an outflow of $216 for disability insurance, row 20 shows the outflow for life insurance, row 29 shows the outflow for county taxes, and row 35 shows the outflow for school taxes.

Row 36 column C shows that there was actually $430 short of the funding for my school taxes, however, the unused balances for the other accounts allows for additional time to get that shortfall covered eventually.

Reconciling My Bank Account Balance To My Workbook

Lastly, each month, as part part of my month end closing process, I made sure my bank account balance matched the workbook on the last day of each month. For example, my actual bank balance at 7/31/99 was $3,018.

A Simple Workbook Is Still All You Need Today

The layout of the worksheet I started back in 1998 is no different from how you would start out today. Across the top of the worksheet, create a date column, a total column, and a separate column for each of your recurring expenses. For the rows, you start with a “beginning balance” of the bank account and enter in each expense column how much each expense makes up that total. The next row would be a deposit row for inflows, next an outflow row for payments, and then a month end balance row. The rows and process repeats from that point forward.

Take Advantage of Today’s Technology

While I am still using Microsoft Excel, my kids are tracking their recurring expenses account using Google Sheets. This also works great for them because they share their workbook with me and I can give them some coaching advice in the cash flow process.