Tweaked cash-flow spreadsheet format

For over 2 years now, I’ve been using spreadsheets to track our month-to-month household cash flow. In general, it’s been a huge success. It helps immensely with short- and intermediate-term financial planning. It lets us know when we’re running short on cash and need to be budget-conscious, and it allows us to earmark money ahead of time for future expenses. Through a combination of living beneath our means and planning expenses with these spreadsheets, we’ve managed to come out ahead every single month since I began doing this.

Tracking expenses like this does involve some extra accounting overhead. I have to spend a couple hours each month maintaining the spreadsheets, and there’s a fair bit of double-entry between the spreadsheets and our financial software. It’s well worth the effort, but I still like to refine the spreadsheets periodically to try to make the process easier.

Each spreadsheet tracks the cash flow in our “main” checking account over the course of a month. There’s a column for income and expenses, and a separate section to track money that is “reserved” for future expenses. I project expenses for the current month and a couple months in the future, so in June, for example, I might have active spreadsheets for June, July, and August. At the end of each month, the balance is carried forward to the following month’s spreadsheet as either income or an expense. I also use a separate sheet to track a second (money market) account, which is used for longer-term expense planning as it earns a higher interest rate. Rounding the whole thing out are sheets to track our two active credit cards. To keep things simple, most credit card expenses are glopped into a single “household expense” budget. I don’t account for individual charges against this budget, just the grand total. However, I do account for individual charges that are outside the household budget.

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Up till now, I also tracked an account we hold with the local credit union. The credit union pays really crappy interest, so I don’t keep much money there. However, they have an ATM that’s convenient to me, so I use the account for cash withdrawals and check deposits. I transfer any balance over a certain amount into our “main” checking account, where it earns much better interest. This month, I decided that it wasn’t really worth the effort to track the credit union account, so I took it out of my spreadsheets. If I really miss it, I’ll put it back… but I don’t think I will.

I follow a similar strategy with the money market and the “main” checking account. Between the two, I like to keep as much money as possible in the money market. However, the money market doesn’t have the convenience of checkwriting or immediate liquidity of funds. If I need funds from it, I need to sell shares, which has a 1-business-day turnaround. So, I use the spreadsheet to plan when I’ll need to sell money market shares, and how much I’ll need to sell. Today, I hacked the spreadsheet template to “recommend” an appropriate amount of money market shares to sell, based on this strategy.

I’m hoping that these two tweaks will simplify the spreadsheets a bit, as they had been getting a little unwieldy. That aside, I highly recommend this method of cash flow management, as it’s worked really well for our family.

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