When it comes to money, timing matters.  If the timing of your income does not match the timing of your expenses, you may come up short without advance planning.  A cash flow budget projects what money you expect to receive, how much you think you’ll spend each week, and when you expect the expenses to occur.  It’s different from a regular budget because it breaks your monthly budget down week by week.  It accounts for when money and other financial resources are expected and when they must be used on needs, wants, and obligations. 

A cash flow budget can help you identify where you’re falling short each week.  It can help you figure out if you have the financial resources on hand to cover the most important expenses.  A cash flow budget can also help you target areas where you can cut back or postpone expenses. 

For people who have irregular, seasonal, or one-time income, a cash flow budget is even more important.  It can help you plan ways to spread the income you receive over future weeks or months when you don’t have money coming in.  Getting started can be the hardest part especially if your finances feel out of control, but these easy-to-follow steps are designed to help you create a cash flow budget that really works for you.  

Step 1: Where does my money come from? Are you self-employed, have multiple jobs, or receive child support or government benefits? These are all sources of income and can help you make ends meet.  As you receive income, keep track of it by using an Income and Benefits Tracker. Ideally, you should do this for an entire month.  https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_income_benefits_tool_2018-11_ADA.pdf

Step 2: Where does my money go? Use a Spending Tracker to log your expenses and get a realistic picture of what your money, on an average month, is spent.  A spending tracker helps you both log and sort spending by categories like utilities and housing to eating out and entertainment.  If you begin to feel overwhelmed, start small and look at your expenses one week at a time by either reviewing your receipts or checking your account.  https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_spending_tracker_2018-11_ADA.pdf

Step 3: Create a cash flow budget: This tool can help you bring your income and spending information together and show you how they interact with one another from week to week.  Use the Creating a Cash Flow Budget to help you remember when your bills are due but also, keep in mind weeks when you need to be careful about your spending.  https://files.consumerfinance.gov/f/documents/cfpb_your-money-your-goals_cash_flow_budget_tool_2018-11_ADA.pdf

Your cash flow budget is about setting targets for how and when you will spend your income going forward.  It’s important to be realistic when you set targets and focus on things you have control over to change.