Cash Flow Tracking - A Simple Plan

If your interested in just getting more out of life, or if your goal is early retirement, keeping track of your cash flow on a regular basis, puts you light years ahead of those who don't.

We have done it for many years leading up to our early retirement and continue to do it to make sure our finances are on-track. It's easy and quick to do each month.

To save time we rounded off every expense to the nearest dollar. The variation from month to month will always be greater than any rounding off errors. We just want to know how much was spent in each categories each month. At the end of the year or two years later, we don't care if we spent exactly $2,411.23 at restaurants... $2,418 is close enough. We don't care if $32 was spent on January 5th or January 19th we just add it to the January total.

We get receipts where possible. When we have no receipt we make a quick note. For example, if we had coffee at Tim Horton's and spent $3.70 it is rounded off to $4. When we get home $4 is added to the "little handwritten list" next to "Restaur"(see below). This small list is kept on top of the stack of receipts.

During the month, all of our receipts are kept together with a large black paper clip. A standard letter sized envelop is used to separate our Master Card receipts within the clip. We keep them separate for checking against our MC monthly bill. The clip and envelop are reused each month.

Individual expenses are not put into a spreadsheet, that is too much like work. Only month totals are put into the spreadsheet. I use an Excel spreadsheet that has the categories listed below. The spreadsheet includes 13 additional columns, one for each month plus the yearly total for each category...to the right. Perhaps 10 minutes of entry time once per month.

We use a one page form (8.5 by 11 inch), with different length columns for each category. The form was made using tables in Word. For example, on our monthly cash flow tracking form, groceries is a longer column and gifts is a much shorter column. Utilities such as Hydro, are side by side at the bottom of the sheet in a smaller table. Shorter columns are stacked one above the other to fill the page.

My Excel spreadsheet has the categories more or less in the same order as the monthly handwritten form. This makes monthly data entry quicker - your not spending a lot of time hunting back and forth.

At month end, or whenever we find the time, or more likely - when we "feel like it", we take a photocopy of the form or print one off, and fill it in by hand. We only enter the amounts spent in each category column. No other details. Groceries might be 158, 89, 105 and so on. Just jot down the amounts and sum each category using a hand calculator. It doesn't have to be very neat, just get the totals.

One advantage of using the hand written monthly sheet and a calculator, is that it allows you to do this chore anywhere. All you need is room to spread out the small piles of receipts. This task can be done at the kitchen table, at work during a break, or at the coffee table while watching TV.

Always getting a receipt when you can makes keeping track easier during the month- no need to remember or write anything down. Just add the receipt(s) to the monthly group under the big paper clip when you get home. At month end, we begin by sorting out all the receipts into little piles by category...groceries, clothing and so on. We also review our check book each month to be sure those expenses are included.

After we have added everything up, we throw out the receipts that won't be needed later such as a cash grocery purchase. We keep all MasterCard receipts and any receipts for auto repairs, or gifts...things that we might want to find in the future.

Finally, we fold the cash flow tally sheet in half with the writing on the outside, staple along three sides (two long and one short), and stuff all the "keeper receipts" into the open end. We keep the "stuffed handmade envelopes" it a shoebox for the year. Whenever I feel like it, I sit down at the computer and input the totals into the spreadsheet. We keep one or two years handy for receipt finding and keep a few years in the basement/crawlspace.

The entire monthly process takes perhaps one hour per month. On occasion when we need to find a receipt if we know the month and year it can be found quickly.

I use an Excel spreadsheet and enter data every month or two. Excel has an "autosum" key at top that makes it easy to build in column totals. Just highlight the vertical or horizontal column plus one extra space at the end and hit "autosum". At year end you can copy the spreadsheet for the next year and clear the data, leaving the headings. I copy the spreadsheet into the same workbook to keep them all together in one file. When there are unusual expenses I use the comment feature in Excel to add a comment for that month/category.

When there is no receipt the spending is recorded on a small piece of paper as follows.

Restaur 4, 9, 15
Grocer 11, 2, 4
Car 4

Our tracking categories include the following.

Municipal Taxes
Income Tax Husband
Income Tax Wife
Groceries
Restaurants
Entertainment
Clothing/Hair
Auto Gas
Auto Mtnce/Repairs
Home Maintenance etc.
Sailboat Costs
Miscell/Drugstore (Sundries)
Health/Dentist
Gifts
Writing/Art
Charity
BC Medical Insurance
CR TV (Cable)
Natural Gas
Telephone (Home Landline)
Cellular Telephone
Internet Dial-up Service
Hydro
School Expenses
Auto Insurance&Registration
Driver Licences
House Insurance
Life Insurance
Safety Deposit Box
Savings for auto replacement

When it came time to make the retirement decision...we knew exactly how much we were spending on everything. That was important to know.
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