This document provides guidance on creating a cash flow plan, including recommended percentages to allocate to different budget categories like housing, utilities, food, transportation, and more. It emphasizes the importance of planning spending ahead of time rather than letting unbudgeted money slip away. The document then provides a cash flow planning worksheet and questions to complete, including calculating expenses as a percentage of income and ways to reduce costs in key categories like housing, transportation, and food.

1. Cash Flow Planning Bonus Project
Plan Ahead
We are told, in business, that we should be proactive; and
broadly what is meant by that is to focus our efforts and
attention on the long-term and to think in terms of the long-term
consequences of our actions.
Proactive people simply will not accept that there is
nothing that can be done about the unreasonable boss or the
events of daily life - they will point out that there are always
choices. It is by the decisions we make, our responses to people,
events and circumstances that proactive people can and do
affect the future. We may have no control over what life throws
at us but we always have a choice about how we are to respond.
—Stephen Covey's landmark book The 7 Habits of Highly
Effective People
The purpose of creating a Cash Flow Plan is to spend your
paycheck on paper before you actually spend it during the
month
Remember:
Money is active and always moving
Wealth is no longer measured in what you make a year
Wealth is measured in what you do with your money during a
year
You will either be on your way to being wealthy, broke, or
poor
Give your money a name
Rent/Mortgage, food, utilities, taxes, insurance, etc.
Money that is simply left unaccounted for will always find a

2. way out of your personal financial plan
This Cash Flow Plan should be done every pay period!
Recommended Percentages used for Budgeting
The following are a compilation of several sources to derive the
suggested percentage guidelines. However, these are only
recommended percentages and will change dramatically if you
have a very high or very low income.
For instance, if you have a very low income, your necessities
percentages will be high. If you have a high income your
necessities will be a lower percentage of income and hopefully
savings (not debt) will be higher than recommended.
ITEMACTUAL %RECOMMENDED %
CHARITABLE GIFTS _________ 10%
SAVING _________ 5-10%
HOUSING _________ 25 -35%
UTILITIES _________ 10-15%
FOOD _________ 15%
TRANSPORTATION _________ 10%
CLOTHING _________ 2-7%
MEDICAL/HEALTH _________ 5-10%
PERSONAL _________ 5-10%
RECREATION _________ 5%
DEBTS _________ 5-10%
Cash Flow Planning
Every dollar of your income should be allocated to some
category on this sheet. Money "left over" should be put back
into a category even if you make up a new category. You are

3. making the spending decisions ahead of time here. Almost every
category (except debt) should have some dollar amount in it.
Fill in the amount for each subcategory under "Subtotal" and
then the total each main category under "Total." As you go
through your first month, fill in the "Actually Spent" column
with your real expenses or the saving you did for that area. If
there is a substantial difference in the plan versus the reality
something has to give. You will either have to adjust the
amount allocated to that area up and another down or you will
have to better control your spending in that area.
An asterisk (*) beside an item means you should consider
using a "cash envelope system" these are items that you would
pay in cash.
Hint: By paying in cash, you will become more emotionally
involved in what you are actually doing with your money, which
will lead you to start saving money!
(1) Emergency Fund should get ALL the savings until 36
months of expenses have been saved.
Note: Savings should be increased as you get closer to being
debt free.
Hint: By saving early for Christmas and other gifts, you can get
great buys and give better gifts for the same money.
Your assignment is to construct a cash-flow plan for yourself.
· Complete the following worksheet
· Answer the remaining questions at the end
· Save project with your name in the filename
· Example: Randy Saleh cash flow bonus project

4. · This project is worth up to 20 points added to your point total
for the class
Note: If you are not yet fully-employed, give yourself the
following:
· $47,000 annual income with full-benefits (Great first job!)
· This equates to a monthly take home pay of: $2,545.00
· Your Apartment/Housing will range $750 - $1,250 per month
· Your Utilities for electricity & water will be a minimum of
$150 | Internet/Cable $150
· Average car payment in America is $450 so plan somewhere
around that number—buying a good used car can get you around
$300/mo. | Car Insurance of at least $85/mo. | Gas/oil/
repairs/license will be around $150/mo. Add an extra $40 for
tolls!!
· I think you can figure out the rest!
Note: If you are still living at home with your parents (genius
move btw) save at least $10,000 in your emergency fund and
pay off your student loans before moving out! Life will be such
much less stressful if you can do this.
Just input numbers for Sub Total and Total columns
Create Your Cash-Flow Pan
Budgeted Item
Sub Total
Total
Actually Spent

5. Difference
Charitable Gifts
Saving
Emergency Fund (1)
Retirement Fund
College Fund
Housing
First Mortgage/Rent

6. Real Estate Taxes
Homeowners Ins.
*Repairs
Utilities
Electricity
Water
Gas
Phone & Internet & TV

7. Water/trash
Food
*Grocery
*Restaurants
Transportation
Car Payment
*Gasoline & Oil

8. *Repairs & Tires
Car Insurance
License and Fees
Page 1 Totals
Budgeted Item
Sub Total
Total
Actually Spent
Difference
*Clothing

9. *Cleaning/Laundry
Medical Insurance
Disability Insurance
Health Insurance
Doctor Bills
Dentist
Prescriptions

10. Personal
Life Insurance
Child Care
*Toiletries
*Cosmetics
*Hair Care
School tuition

11. School Supplies
Child Support
Subscriptions
*Gifts (include Christmas)
Miscellaneous
*Blow $$$$
Page 2 Totals

12. Budgeted Item
Sub Total
Total
Actually Spent
Difference
Recreation
*Entertainment
*Vacation
Debts
(hopefully $0)
Visa 1
Visa 2

13. MasterCard 1
MasterCard 2
American Express
Dept Store 1
Dept Store 2
*Use cash to pay for these purchases—you will usually not
spend as much when using cash because cash is emotional.
There is little emotion when “swiping” a credit/debit card for
purchases

14. You will need to add these numbers with your calculator
Page 3 total
Page 2 Total
Page 1 Total
Grand total expenses
Total Income
Difference
This number should be $0
With cash flow planning, every dollar has a name, and every

15. dollar is accounted for.
Note: It will probably take at least 3 months to get this
right...Do not get discouraged, it will work!
Now answer these questions:
We are living through a global personal finance implosion that
began in the early 2006 and might not end until 2020—if it ends
at all. A major reason for this catastrophe in America and other
countries is that a majority of people have an unsustainable car
and house payment. We are basically living too large in
comparison to our monthly budget.
1. Take your car payment—including gas & oil, insurance, and
repairs, and divide it by your total income for the month. What
percentage of monthly income is your car expense?
a. If this amount is more than 20%, do you think that this is a
reasonable/sustainable expense for your monthly budget—why
or why not?
Type your answer here
i. Too many American families have car expenses that exceed
much more than 20% of their monthly budgets—this is a good
way to go broke. List some ideas to lower your expenses in this
area.
Type your answer here

16. b. If your car expenses are 15% or less of your monthly budget,
then you have a sustainable car expense. What are you doing to
keep your expenses down in this area?
i. List some ideas to lower your expenses in this area
Type your answer here
2. Take your house/rent payment—including repairs, insurance,
and property taxes, and divide by your total income for the
month. What percentage of monthly income is your housing
expense?
a. If this amount is greater than 35% of your monthly budget, do
you think that this is a reasonable/sustainable expense for your
monthly budget?
Type your answer here
i. Too many American families have housing expenses that
exceed much more than 35% of their monthly budgets.
According to the Wall Street Journal, 30% of all mortgages in
America are “under water,” meaning the mortgage is more than
the house is worth.
ii. List some ideas to lower your expenses in this area.
Type your answer here

17. b. If your housing expenses are 34% or less of your monthly
budget (lower the better), than you have a sustainable housing
expense. What are you doing to keep your expenses down in this
area?
i. List some ideas to lower your expenses in this area
Type your answer here
3. Take your food expenses for the month and divide by your
monthly budget. Is this amount a reasonable number to provide
you and your family healthy food for 30 days?
a. Food prices have really been going up this year. List five
ways you can reduce your food budget without skimping on
nutrition.
b. Is it feasible for you to grow some of your own food by
having a garden?
Type your answer here
4. Looking back at your budget, what other areas can you
reduce expenses?
Type your answer here

18. 5. Finally, list at least two ways that you can increase your
monthly income.
Type your answer here
As times get tougher, and friends it looks like economy is likely
to get worse before it gets better, you can look back at this
exercise to find strategies that will help ride out this storm.
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