A household's financial life doesn't happen on payday. It happens when money is needed. Household financial management should be organized around achieving household goals by managing the future flow of money—not by repeatedly deciding how to divide the next paycheck.
The differences between managing cash flow with You Need A Cash Plan and budgeting include:
Budgeting
You Need A Cash Plan
What the system is organized around
The next paycheck.
Future money moments.
Primary question
How should I divide this paycheck?
What will my money need to do next?
Available tools
Budgeting apps, budgeting websites, spreadsheet templates, paper envelopes, envelope apps, banking apps, personal finance budgeting software, pen and paper, printable budget planners.
The standard tool for managing income that works for everyone regardless of income level.
Exposure of data to online risks
Tools connecting to online accounts require account numbers and passwords.
Does not connect to anything on the Internet. No account numbers or passwords are used.
Getting started
1: Calculate your income.
2: Track your expenses.
3: Set financial goals.
4: Choose a budgeting method (50/30/20 rule, zero-based, envelope system, etc.).
5: Choose a budgeting tool.
6: Create your budget.
7: Monitor and adjust your budget daily, weekly, and monthly.
1: Choose checking account.
2: If needed, add a cash plan.
3: Add holidays.
4: Add outgo categories.
5: Build cash plan (add income, credit cards, bills, allowance).
6: Choose a start date.
7: Pay bills the first time (calculate startup allowance, initialize checking account balance, initialize credit card activity, pay bills).
Ongoing activities
Daily: Keep track of your spending by category. If you don't have an emergency fund, use credit cards to pay for unexpected expenses or to buy expensive items.
Weekly: Track spending, check if you are staying within category spending limits, adjust for any overspending.
Monthly: Compare budgeted vs. actual spending, adjust for upcoming expenses, rebalance spending categories if needed, review financial goals.
• Enter deposits.
• Balance checking account.
• Get weekly allowance.
• Adjust next bill payments.
• Pay bills twice monthly.
• Enter credit card charges.
• Reconcile credit card statements.
• Add/use sinking funds.
• Add/use short-term savings.
• Add payments to long-term savings.
How success is measured
Every paycheck is allocated.
Every future money moment is successfully funded.
Tools available for measuring your financial health
• Debt-to-income ratio
• Net worth
Savings calculators
• Annual percent yield
• Annuity - ordinary/due
• Annuity - growing
• Annuity - payment
• Annuity - solving for n
• Compound interest
• Simple interest
• Doubling time
Loan calculators
• Amortize loan
• Loan payment
• Balloon loan payment
• Loan interest rate
• Number of payments
• Remaining loan balance
Options for creating payoff plans for debt
• Custom payoff plan for one debt.
• Custom debt snowball for multiple debts.
• Custom amortization plan for a credit card with a high balance.
How to play "what if?" with changes you are thinking about
Help with tasks involved in managing your household finances
• Automatic transaction register.
• Use transaction files downloaded from any bank, credit union or credit card website.
• Semi-automatic balancing of checking account and reconciliation of credit card statements.
• Percent of income, fixed monthly amount, or unscheduled set-asides to short-term savings.
• Automatic emergency fund.
• Link payments to sinking funds and savings for automatic use of set-asides.
• Keep contact and login info for bills, credit cards, persons, and companies.