FI - Simple Cash Flow

Simple cash flow example for a person earning net 40000 INR per month who is of 29 year of age and plans to retire at 55. I have created a simple cash flow where in the said person has a loan period of 2 years remaining and has  bank  balance of  200000 INR earning 7.5 % interest per annum.The sample below show initial couple of years and last 2 year projections.

Head	Monthly		2009	2010	2011	2032	2033
Income Salary	40000		480000	480000	480000	480000	480000
Surplus from Preceding Year				120000	240000	6540000	6840000
HH Expenses	12000		144000	144000	144000	144000	144000
Loan	15000		180000	180000	0	0	0
Insurance	3000		36000	36000	36000	36000	36000
Surplus carried to next year	10000		120000	240000	540000	6840000	7140000
Current balance @7.5% p.a.	200000		215000	231125	248459	1134575	1219668
Special Expenses
Corpus							8359668

For sake of simplicity I haven't used any mumbo-jumbo that usual Financial Planner do i.e. to bring in financial jargon's like rate of inflation etc. (which will up the expenses considerably over period of time). This becomes valid assumption as I haven't considered hike in salary / income as well, which I believe usually more often than not beats rate of inflation. Thus have kept all the figure like like Income, Expenses and Surplus constant over next 26 years (thus surpassing rate of inflation etc.. in plan) . I  have also not factored in rate of return on additional savings annually in the calculation so that we get a conservative estimate of wealth created over next 26 years to retirement

So first step for you would be to calculate average income / expenses per month under major heads. Then fill iut the row for special expenses expected to be incurred in respective year as per financial goals we have set out as per my earlier post. This will give you the feel of how you stack up financially over period of time. Having got the hang of financial outlook over next few years then we can start the financial plan to suit our needs.


Now we have put in place our financial standing as on date, financial goals and Cash flow over next few year thus a financial plan structure is in place/ remember a good financial plan or any plan for that matter needs over hauling or fine tuning at regular intervals. I would suggest reviewing and updating financial plan once a year. For e.g. our expenses may increase when we get married or become parents or any significant mile stones may change our income or financial goals hence need to revisit plan every year.

In my next post will try to cover some important terms / concepts of investment like magic of compounding, rule of 72 etc. May be briefly touch upon ideal asset allocations etc. till then have a good time. 

By the way just in case you need my assistance please feel free to post your queries or comments or mail me. 

Cheers!