Cash flow forecast

Cash flow is a record of what a month did; a cash flow forecast is the same subtraction run forward, one day at a time, to see what the coming month will do to the account. A checking balance on the 1st includes the paycheck that just landed and none of the bills about to leave, so it reads as its high point, and the balance on the 14th reads as its low; neither says whether the month works. The forecast's answer is the lowest balance it finds and the date it falls on, not the month's total, because a month that ends ahead can still touch zero on the 30th.

In a sentence

• "The cash flow forecast has checking down to $90 on the 14th, so the savings transfer waits for the 15th."
• "The budget said the month fit. The cash flow forecast said the 30th would not, once the annual premium was on it."
• "Re-run the cash flow forecast after a $400 repair, and every balance after that day moves down by $400."

How it works

1. Start with today's checking balance, the actual figure.
2. Add each expected paycheck on its date, at take-home. A paycheck on the 15th is worth nothing on the 14th.
3. Subtract each bill on its due date, including the card statement on the day it will be paid and any non-monthly bill that falls inside the window.
4. Subtract a daily rate for variable spending, last month's groceries, fuel, dining and the rest divided by the days in the month, on every day.
5. Run the balance forward date by date and mark the lowest figure and its date.
6. If the minimum is below zero, or below the cushion you want, act before that date.

Balance on a day = balance the day before + paychecks that day − bills that day − the daily rate

Thirty days, or the stretch to the paycheck after next, is the usual window: long enough to hold every bill in the cycle and the card statement, short enough that the daily rate is a measurement rather than a guess.

An example

Checking holds $3,200 on the 1st after the paycheck, variable spending runs at $60 a day from checking, the next paycheck of $2,000 lands on the 15th, and the card statement of $700 is paid on the 24th.

Each balance includes the $60 a day of variable spending since the previous line. The month that looked comfortable on the 1st touches $90 on the 14th and ends $100 below zero, and the cause is the $600 premium on the 10th, which was known a year ago and has $600 waiting in a sinking fund. A transfer of $600 from savings on the 9th lifts every later figure by $600: the 14th reads $690, the 30th reads $500, and the minimum becomes $500, more than a week of variable spending above zero. Ten days' notice, one transfer, no fee.

Why it matters

The forecast turns a shortfall from a fee into a task. A balance that will go negative on the 30th is, on the 10th, a problem with a date, and a problem with a date has cheap fixes: a due date moved past the paycheck, a sinking fund drawn on, a statement paid later inside its grace period, a daily rate trimmed for the days before the dip. The same shortfall discovered on the 30th is an overdraft or a late payment. The forecast also shows the cushion: a month whose minimum is $1,200 is holding more in checking than it needs, and part of that could be earning interest in savings.

Cash flow forecast versus cash flow versus a budget

A cash flow forecast predicts an account's balance on each coming day; cash flow records what a past period came out to; a budget sets what each category may take. The budget is about amounts and the forecast is about timing: a month whose spending fits inside its income is fine to the budget and to the cash flow figure, and the forecast is the one that notices the $600 premium leaves five days before the paycheck meant to cover it. See Cash flow and Budget.

Common questions

Is a cash flow forecast the same as a budget? No. The budget says how much each category gets for the month, and the forecast says whether the account can pay for it on each day. A budget that fits the income can still produce a negative forecast on the 30th if the bills cluster, and the forecast is what catches that.

How far ahead should a cash flow forecast go? Thirty days, or to the paycheck after next, so that every bill in the cycle and the card statement are inside it. Beyond that the daily rate is a guess, so the forecast is re-run each month rather than extended.

What if the forecast goes negative? Find the date, then choose the fix that costs least: a due date moved past the next paycheck, a transfer from the sinking fund built for that bill, a card statement paid a few days later inside its grace period, or a lower daily rate for the days before the dip. Two weeks' notice makes any of them a task.

Should savings transfers be in the forecast? Yes, on their dates, as outflows from checking, because they lower the checking balance even though they are not spending. A savings transfer on the 1st can be the reason the 14th is thin.

Go deeper

• How to forecast your cash flow for the next thirty days builds the forecast step by step and finds a $190 dip that one sinking fund transfer turns into a $530 low.
• How to line up bill due dates with your paychecks moves the due dates that make one paycheck carry too much, the fix for a forecast that dips before every second paycheck.
• How to budget when all your bills land in the same week compares three fixes for a week that takes most of the month's bills at once.

Where it shows up in Zypper

Zypper supplies the forecast's inputs from your accounts. Every bill Zypper identifies is a recurring group on the recurring page with its frequency, its next expected payment and amount, and its status, and recurring income shows its next expected date the same way. On the budget page, a bill in a spending category counts as money already spoken for in the month it is due, at its usual amount, before the charge arrives, and shows as Expected, Paid, Late or Settled in the category's panel. The Upcoming payment expected notification emails you before an expected payment. See Recurring transactions and bill tracking and Recurring bills in your budget for the details, or get started with Zypper to see your bills' dates before you run the numbers.