To effectively manage cashflow, you need to know where your money is going. Once you know what you’re spending (and where), you can then modify your behaviour to increase your savings.

A cashflow budget is an essential part of any financial plan. It helps you understand what cash will be available to meet expenses over a certain timeframe, usually 12 months.

It allows you to:

• Highlight where you’re spending money
• See what proportion of your income is being spent
• Identify areas of unnecessary spending
• Determine the expected flow of cash
• Plan for those months when additional funds are needed

Just as important as creating a cashflow budget is reviewing it – regularly – because external events can always crop up that will not be in line with what you planned for.