Sunday, February 19, 2017

My Personal Cashflow

Kyith wrote a good piece of information this morning (Link Here) regarding segregating the difference between balance sheet and cash flow/cash and connecting the dots between how we look at company the same way we tend to shape our very own lifestyle and finances.

After reading the article, I am tempted to look deeper into my own cashflow because I don't track my income and expenses very closely, let alone cashflow. I feel like I am at the stage where such tracking to the cents does not give me much marginal benefit compared to the time I'm spending them on to track. I get the idea what I needed to do on the most basic level of finances, i.e to spend less than whatever I earn

The idea at first was to leave open the approach in that manner to allow myself room to endeavor around the income and expenses amount. If I need to increase my expenses by 10%, I would first find ways to increase my income by 10% or at least to that range. If my income was cut by 10%, I needed to do the same to my expenses. I think the survival guide needed to survive will allow one to adjust to that circumstances, not necessarily easy but definitely doable.

Balance Sheet

Before I go to the cashflow portion, I'd have to review on the balance sheet because they are somewhat interlinked.

On my own backend, I have the impression that I yield net positive cashflow as I seem to be able to add onto to my existing equity portfolio every month but that is about all I can guess. I do not exactly know the quantum on the amount.

For the purpose of easy reference, I had only included the equity portfolio so no cpf or anything else.


I was curious to find out and so went ahead to calculate this afternoon when both my boys were having their afternoon nap. 

I knew expenses were creeping up due to certain circumstances these days so I was expecting my cashflow to be poorer than before.

I took a piece of paper and computed the big item range expenses I could think of and wrote it down. Some of the big item expenses that has a direct impact to my cashflow include insurance, taxes, school fees (pre-nursery), groceries, utilities, domestic helper & nanny's salaries, transportation, meals, monthly doctor's visit for my newborn, weekend spending and miscellaneous. 

Cash inflow in my circumstances would only be coming from salary and dividend income. CPF was not taken into consideration in this instance because it doesn't represent a cashflow for the time being.

My calculation shows that my current ratio of cash outflow to cash inflow (only salary excluding dividend income) stands at 78%, which means I have a net cash inflow of around 22% as a percentage of income every month. Including dividend, the ratio would drop to 57%, which translates to a net cash savings of 43% every month.

I am rather worried and more conscious on the spending these days because this sort of cash outflow has elevated to levels I have not seen before. My ratio of savings in the past was well over the 95% to 110% range but it has gone downhill after that. This means that my expenses are creeping up faster than my income could fetch.

Final Thoughts

I am rather glad I did this exercise because on some days I am rather complacent with the expenses portion since I do not track them closely.

I think with the elevated expenses and a rather tightening of cashflow, I might need to be more conscious on spending certain expenses now that I have the number with me on hand.

For those who have a rather poor controlling on their finances or cashflow, I'd encourage you to do this simple exercise just from a high level point of view. I think there's a lot to takeaway and think about from this example.


  1. One way for lazy folks to track cash flow without bothering about details is to have three or four different bank accounts for household expenses, income (earning/salary/etc) and investment. Every month top up household expenses and investment account and whatever left in income account is saving.

    1. Yea thats true Uncle CW. A lot of my friends transferred to each accounts automatically based on percentage allocation and then just spend freely from there.

  2. i am even lazier than that or maybe not academically inclined to bother to do such mental exercise.

    i just estimated my monthly bank accounts spending only

    And in every Jan. i just estimated my Net Worth.

    AS long as my NET Worth can be maintained around the same level, i am happy already.

    i also estimated my NET Worth at any time i think i have overspend.

    Because i am in my "De-accumaulating" phase of life with zero H. C.

    i am into preserving my capital/assets, (only spending the money generated by Assets if possible) more than growing my capital/assets.

    But who says i will not invest up to 40% or more in SGX when opportunity knocks at my door.

    When i was younger, i did nothing at all.

    i only know till this day don't spend money unnecessary.

    If have to at least make sure you still spend within your means.

    "Spend Below Your Means" has always been my Motto all my life.

    But it getting harder and harder, this days.

    So most friends and relatives think we are quite poor LOL.

    Which suits us to a T.

    You can not catch me wearing anything on my body worth more than my shirt and trouser LOL!

    1. Hi Uncle Temperament

      Thanks for sharing your input. Its nice to know that you are keeping your hard taught principle when it comes to spending and even though you are in a de-accumulation phase of your life you still are able to maintain that capital with you.

      A lot folks i see is using the withdrawal method, so capital gets eroded and gone down over time. Easier that way but lesser margin safety

  3. i think the first good thing is that you have the level of vulnerability to revisit whether your cash flow is strong enough.

    with the kind of expenses i am amaze you can still load so much into your portfolio

    1. i think i was quite fortunate not to be caught with/by the SOR risks in the stock market & general management of money.

      That's if you can manage to "control" the Time Factor in your velocity of your money, you most probably will not be caught lol.

      i very rarely use leverage from the beginning (during my accumulating phase) till now.

      My thinking is i rather people owe me money (interest from banks, dividends from stocks, etc...)then i owe someone.

      How can i get into debt when i believe in the Motto of Spending Below Your Means!(unless someone willing to lend me money without collateral-that's consider as a NPL on the spot)

      Besides, your asset is never yours, until it has some equity.

      Still it's not yours fully.

      i think with the exception of WL policy.

      Once it has cash value more than the premium paid, it's yours.

      Though WL should be looked as an enforced saving, for legacy and even as an emergency fund and never think it's as an investment.

      It's only is an investment for people who doesn't invest in stock, bond, property, etc.

      Pssst, i have a few WL policies in my family for more than 27 years.

      One is a paid up 15 years policy this year.

      Which means it started to accumulate cash value.

      Funny and quite contradicting since i have been investing for more then 27 years already in the stock market.

      For i am definitely not one of the people who believes in saving only.

    2. Thanks Kyith.

      It's a rather good exercise and small wake up call actually. Sometimes we just need to work the maths around once in a while to know where we really stand or whether it needs some tweaking adjustment to lifestyle.

  4. I have been tracking my personal cash flow for quite a number of years. With my children finishing their tertiary education, the ratio of cash-inflow vs cash-outflow has increased. Since 2015 I have deliberately omitted salary income from the cash flow computation, as part of my retirement planning.