Personal Finance – Guidelines to Help Keep an Adequate Personal Cash Flow

How can you minimize the impact of a down economy? This is an important question which we can begin to contribute an answer. A major start is to have a set of fundamental practices to consistently use when things are going well and when things are not going well. The preparation for reducing the impact of a down economy takes place when the economy is doing well. The preparation consists of, at least, the following: practicing “Pay Yourself First”, tracking your cash outlay, reducing or controlling your expenses, maintaining a reserve account, and having an account for your contributions.

The following steps can be very effective in an immediate attempt to build financial strength to support a healthy personal cash flow during an up or down economy.

1. List the amounts and sources of all income that you receive and are available for you to manage within a period of a month.

2. List the amounts and recipients of all of your disbursements within a period of a month.
Note: For single payments or annual payments divide the total amount by twelve to get the monthly required outlay.

3. Align each disbursement to one of these four transaction categories: “Pay Yourself First”, Contributions, Expenses, and Reserve.

4. Assign the following percentages of available cash as a reference for each of the following categories 10%(“Pay Yourself” Account), 10% (Contributions), 70% (Expenses), and 10% (Reserve).

5. Add subcategories to any of the above, if you desire. Within the expense category, add the following subcategories and estimated percentages which are similar to the data from the US Bureau of Labor Statistics: Housing (42%), Transportation, (18%), Food and Beverages (15%), Education/Communications (6%), Healthcare (6%), Recreation (6%), Apparel (4%), and Misc (3%).

6. Compare the 70% of your available cash amount for expenses to your actual total Expenses for the month.

When available cash exceeds the total cash needed for expenses, the surplus maybe distributed by formula to the other categories, or used to reduce outstanding balances. On the other hand, a reversal may occur where the amount of cash needed for the month expenses exceeds the available cash. This challenge calls for an immediate and serious engagement of one or more debt relief strategies and perhaps advice and counsel from a professional.

Learn more about value-added spending, revenue retention, cash flow, and personal finance and health by going to


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