Page 554 - Introduction to Business

528 PART 5 Finance

EXHIBIT 15.4
Cash Flow Budget

Cash Inflows

Wages or salary $
Spouse’s wages or salary $
Interest and dividends $
Rent and royalty income $
Other $
Total cash inflows $

Cash Outflows

Rent or mortgage payments $
Food $
Clothing $
Utilities $
Eating out $
Furniture and appliances $
Recreation $
Gas for car $
Car payments $
Car repairs $
Car insurance $
Doctor bills $
Medicine $
Interest expense $
Household repairs $
Life and disability insurance $
Education (tuition) $
Day care $
Taxes (income, property, etc.) $
Other $
Total cash outflows $

Net cash inflow (outflow) $

a percentage of your net income. These are, of course, only estimates, and depend
ultimately on your personal circumstances and tastes.
If your cash flow budget for last year shows a net cash outflow, try to reduce var-
ious cash outflow accounts as you prepare your projected cash flow budget for next
year. Exhibit 15.6 (on p. 530) suggests ways to cut expenses. Other possibilities
include reducing the balance on your credit cards by taking out loans at much lower
rates in order to pay them off. After paying off your credit card debt, it is good advice
for most people never again to accumulate debt on credit cards. If you use credit
cards, be sure to pay off your balance each month.
When your monthly cash inflows exceed your monthly cash outflows, you are
on your way to investing for the future. However, before you begin investing, you
need an emergency liquid fund, or savings cushion—for example, six months’ liv-
ing expenses—in order to cope with unanticipated future expenses. If last year’s

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