How to build a simple cash flow forecast (and never be caught short)

Budgeting tells you the totals; forecasting tells you the timing

You can be perfectly within budget and still be short on the 27th. A forecast puts dates on the money.

What you need

1. Today's balance 2. Every expected payment in, with dates 3. Every known payment out, with dates 4. Your typical variable spend per week

Build it in four steps

Step 1: Start with today's balance. Step 2: Add income on the day it actually lands, not the day it is due. Step 3: Subtract fixed bills on their real dates. Step 4: Subtract a weekly allowance for food, fuel and everyday spending.

The running balance is your forecast. Any point that dips near zero is a warning with a date on it.

Look 90 days out

Thirty days catches this month's crunch. Ninety days catches insurance renewals, annual subscriptions, holidays and quarterly bills — the ones that actually cause damage. Fund them with sinking funds.

Fixing a low point

You usually have four options, best first: move a bill date, bring income forward, cut a planned cost, or use the buffer. Borrowing should be last and only with a repayment date.

Update it weekly

Five minutes: correct the actuals, roll the window forward. A forecast that is a month stale is fiction.

Let it build itself

MoneyQuilt builds a cash flow forecast from your recurring bills, income and imported transactions, and flags the dates where you go tight before they arrive.