Developing our Annual Cash-Flow Forecasts

In my post about My Personal Finance Guiding Principles from a few weeks ago, I made note of the fact that I use a cash-flow approach to managing our annual financial planning as opposed to a more traditional, categorized, formal budget.

I usually get the process underway in early October so I can maintain at least a quarterly outlook on the future state of our bank accounts. This year, life seemed to catch up with me and I didn’t get started until the beginning of November. A growing family, new and more responsibilities at my new(ish) job, writing for this blog, and any number of other things all conspired against my regular financial planning routine it would seem!

For my cash-flow spreadsheets, I don’t break things out by categories like transportation, groceries, gifts, and so on. Instead, I input all of the debits and credits that I know my bank accounts will likely encounter over the course of the year. The debits are based on known paycheque figures and the credits are arrived at by utilizing years worth of data on bill payments to provide a realistic estimate for the year ahead.

Once all of the figures have been put into the spreadsheet, I use a simple formula to figure out what our bank balance will be on any given day of the year after each deposit or payment.

From there, I look at the high and low points of the projected balance throughout the year and determine when we can bump up or will need to draw from our separate, high-interest savings account.

Lastly, I determine a reasonable figure for our monthly ‘adult allowance’, input that number at the beginning of each month, and update the movement of money in and out of our savings account to maintain the minimum balance our bank requires to eliminate the fees on our chequing account.

And that’s about it! At the end of the process, I have a spreadsheet that gives me a snapshot of what any point in the coming year might look like for our chequing account.

I repeat the process for my personal account (where my adult allowance goes). That spreadsheet is much simpler because there’s no recurring bill payments or bi-weekly pay periods to account for, just a monthly deposit on the debit side, and my investment purchases, the occasional cash withdrawal, and credit card payments on the other.

What I love about this process is that there are rarely any surprises over the course of the year. I have a pretty good idea right now what my bank accounts will look like on this date next year. Any time we have an expense come our way (even those that are large and/or unexpected), it’s simple to check the numbers, figure how it works into things, and update the spreadsheet to reflect that.

Email alert about an upcoming utility bill payment being due? Open the file, update the cost, see the projection. Credit card bill coming due? Open the file, update the cost, see the projection. Fridge breaks down and needs replacing (this just happened to us a couple of weeks ago)? Open the file, figure out what we can afford, update the numbers.

It’s as simple as that.

As easy as this process has become for me after years of use, I’ll readily admit that this probably isn’t an approach for everyone. It’s fairly manual. It doesn’t allow me to know precisely what I typically spend on groceries, for example. It requires regular monitoring (I check and update it almost daily). And at times it can be very time-consuming.

But it’s what works best for me. And really, isn’t that the important thing with so many aspects of our lives? Do what works best for you!

Developing, tracking, and monitoring my cash-flow spreadsheets keeps me in tune with our current state of affairs, keeps our financial health front-of-mind, eliminates guesswork, and results in a comfort level with our money that no other system I’ve tried has provided me.

So until I find something that works better for my particular situation, I’ll carry on with this process and stay comfortable with my finances!

Do you develop a budget each year? Do you follow a traditional approach, something that sounds like what I do, or something else entirely? Let me know by leaving a comment, connecting on Facebook, Twitter, or Instagram or by emailing me at

Until next weekend, thanks for reading!

Frugal Father

6 thoughts on “Developing our Annual Cash-Flow Forecasts

    • Frugal Father says:

      I’ve always done it in Excel. I’m considering moving to google sheets at some point to make it easier to access and update from a variety of devices, but I’m pretty change-averse when it comes to technology, so I don’t expect that to be a short-term move.


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