How to plan finances long-term

The most important thing in finances (both personal and business) is so-called term cash flow. It basically shows how much money is moved into your pocket and out of your pocket over time. For the last 5 years I carefully watched this parameter for my life and businesses because it’s impossible to achieve a long-term financial goal without knowing your current assets (i.e. closing balance) and without predicting how it will change over time. I’m going to share an example(template) of a financial plan so that you can create your financial plan based on that example.

That said, I mostly use Excel spreadsheets for that kind of stuff because it is the most flexible software to calculate numbers. You can do anything with Excel; on the other side, you can only do things restricted to what other software allows you to do in its interface. Disclaimer: I completely understand that there might be a software that is better(easier) for a particular problem than Excel, what I’m saying is that in Excel you are only limited by your imagination and not by what is possible in an interface of another program.

Now you can go ahead and download actual example. There are 4 sheets in the file:

  • Constants (here you can set different variables like exchange rates for different currencies or salary, i.e. anything that can be re-used multiple times);
  • Current assets (here you list all the assets you have at the moment like real estate, car, stocks, cash, debit cards, bank deposit etc.);
  • Avg. monthly expenses (here you list all expenses that you have in general; it’s quite hard to predict that if you don’t use expense tracking app, but once you start controlling your expenses it will get better quite soon);
  • Planning (here you actually plan your future finances, play with numbers and coefficients, add more income from other sources that you might want to test or decrease income from all sources to see if you are able to keep up with such a stress test — in case of injury or loosing a job that might be helpful to know how much you need to save).

That’s basically it, would be happy for any questions or comments, otherwise I hope that will help you to structure finances and achieve your goals.