Every time I ask this question to people, they always tend to say yes. I’m not baffled that people say yes because its a very broad question and everyone has a different definition of their future.
I usually hear future plans about travel, education and with their partner, but I rarely hear planning for a financially stable future.
Every financial foundation is laid upon the principle of one equation; the in and outflow of money. The math is pretty simple. Money is coming in every month, money flowing out every month. The difference between in and outflow is what you save, what you are dissaving or what you have to borrow.
Everybody knows that right? Most people tend to agree.
Next, I’ll ask them if they have an accurate chart or spreadsheet of their cash flow and financial situation. Here is where I get the “no I just know or see whats left in my bank account.” The tricky part is, if you want to buy a home later you have to start now. On average, people need to bring about 20.000 to 25.000 euro of their own money to finance their own home and without proper planning and budgeting, this will never happen.
You can just use excel and try to give every euro/dollar a “task”. For example; this amount of euro’s will be tasked to pay this bill, that amount of euros will be tasked with saving for a home.
Some tasked are more fixed than others. Like the bills that come every month. These bills, like rent and utility bills, are fixed costs. Other bills like occasionally buying coffee in the city or buying/paying for something you haven’t planned are variable costs.
Try to look into your history’s transactions and identify which transaction is fixed or variable.
So guys and galls, take your own responsibility. Do you have your own spreadsheet with your cash flow and financial situation or are you planning on making it in the foreseen future?
Bernhard has done his spreadsheet. He can now relax as you can see in the picture. 🙂