Talk with any financial planner and I think they’ll agree that a households ability to build wealth starts and ends with cash-flow. If they are able to spend less money than they earn then they will be able to set aside cash for savings and investment. That money will then benefit from compound interest which even Albert Einstein called “the most powerful force in the universe.” Conversely, a household that spends the same or more than they earn will be forced into a cycle of debt to acquire housing, cars, college tuition, etc. That household will not build long-term wealth. Do you know if you’re getting ahead or falling behind?
Despite its critical importance to the financial planning process very few households operate on a budget and/ or track their spending. I can appreciate why. The process is tedious and overwhelming. I wanted to share THIS SPREADSHEET that I found on google docs for those people who want to take a pro-active step in evaluating their cash-flow. I would recommend sitting down with your bank and credit card statements at least monthly to record your spending so that you can see for yourself how you’re doing.
What I like about this spreadsheet is that the spending categories are plentiful and customizable so you feel like you are getting an accurate depiction of your spending history. If you have any other ideas for tracking cash-flow please leave them in the comments section below.