Manage Your Debt

Cash Flow: Income and Expenses

Proper credit management will save you money. Keep your house in order by monitoring your spending and borrowing.

Income is any money you receive. Taxable income includes wages, alimony, interest, dividends, rental income, commission and tips, unemployment compensation, capital gains, pension, annuities, Social Security and royalties. Non-taxable income includes child support, gifts, and inheritances.

If you are company-employed, your paycheck is a valuable source of financial information. It shows gross pay, a detailed list of deductions, and net pay. Part of understanding where all the money goes is knowing what these amounts are for. 

Learning to Keep an Expense Record 
If you’ve kept an expense record, tally up weekly and monthly figures. If you haven’t kept an expense record, get out your checkbook and any receipts you can find. Walk around the house to see what you’ve bought recently. Try to find some old credit card bills. Keep track of your cash outflow for a few weeks to see how you are spending your money. 

The more details you have, the more you know. The more you know, the better your decisions will be. Think about expenses that don’t occur regularly, like car repairs, and items that you pay only once or twice a year, like homeowner’s insurance. Take a look at your checkbook to see if the amounts look right. Then put all that information into a cash flow chart. It’s called a ‘cash flow’ because it shows how money flows in and out of your life. 

You don’t have to do a whole year; try one or two months and see if a pattern develops. Your expenses are subtracted from your take-home pay to determine your cash balance. This amount may be negative. Don’t worry about that yet, it just means you have some work to do.

We use the following categories for expenses. You can change them if you’d like. Think of the chart as a suggestion. We’re trying to give you a feel for the kinds of categories you’ll need if you’re going to take a hard look at things. 
For items that do not occur weekly, you have two choices: either put them in when they occur, or divide them into weekly amounts.

These definitions will help you complete the form that follows.

Cash Flow
Savings/investing:  Whatever amount you are saving. We’ve put it here first, because saving should come first! Include the amount you put into your retirement plans.

Federal and State Taxes: Put in the amount of state and federal taxes from your pay slip. If you think you’ve paid too little or too much, make an adjustment. Or use the amount from your last year’s tax return, divided up into weekly amounts. Add a little if your salary’s gone up, or if you have additional income.

Monthly Cash Flow	Week 1	Week 2	Week 3	Week 4	Week 5	MonthTotal
Savings/Investments
Federal & State Taxes
Mortgage or rent
Home repair/maintenance
Property taxes
Life/disability insurance
Home/renter’s insurance
Auto insurance
Credit card/loan payment
Utilities & telephone
Food (include eating out)
Clothing
Grooming
Gasoline
Auto repair/maintenance
Other transportation
Medical care
Education
Child Care
Alimony/child support
Entertainment
Vacations
Gifts/charitable contributions
Laundry/dry cleaning
Others:
(a) Total Expenses (add all above)
(b) Income
(c) Cash Balance (b) - (a)

Income:
Put in the amount of your gross earnings from your paycheck(s), and other income, like gifts, investment income, alimony & child support received.

Cash Balance:
Subtract expenses from income. Since ‘savings and investing’ are included above, this amount should be ‘0.’

Monthly Cash Flow	Week 1	Week 2	Week 3	Week 4	Week 5	MonthTotal
Savings/Investments
Federal & State Taxes
Mortgage or rent
Home repair/maintenance
Property taxes
Life/disability insurance
Home/renter’s insurance
Auto insurance
Credit card/loan payment
Utilities & telephone
Food (include eating out)
Clothing
Grooming
Gasoline
Auto repair/maintenance
Other transportation
Medical care
Education
Child Care
Alimony/child support
Entertainment
Vacations
Gifts/charitable contributions
Laundry/dry cleaning
Others:
(a) Total Expenses (add all above)
(b) Income
(c) Cash Balance (b) - (a)

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