![]() ![]() (Until five or so years ago I used Excel for these functions exclusively. I use Quicken to track and project my budget, but you can do all of the following with other software. First, let’s apply our budget to the fundamental problems of budget tracking and projection. I’ll have a lot more to say about that in subsequent posts. These examples illustrate that surplus is the key to investment planning. If you have multiple goals you can set up a spreadsheet to allocate fractions of your surplus to each of them and then compute how long it will take to reach those goals (or vice versa: set the time by which you need to reach the goal and compute what fraction of surplus is required). Therefore, if you have a goal, like saving $20,000 for a new car, you can use your surplus value to see how many months it will take you to do so. Your surplus represents how much you can spend on extra stuff or invest per month. For simplicity, I will call this amount your surplus and I will assume it is a monthly value (this is not important if you prefer a yearly value, that’s fine). That is, it is income less all necessary, regular expenses. The bottom line of such a budget is a monthly (or other period) average net income. I assume all readers of this post have constructed a descriptive household budget with positive cash flow (if not, see the prior post). Investment Planning: Reader Tips, Tricks, and Links.Multi-Period Planning and Asset Allocation.Budget Tracking and Projections (with Quicken Tricks).Here’s a list of the other posts in the series: For those who haven’t read the first post (or ha ve forgotten), I’m soliciting feedback (tips, tricks, links, etc.) that I will cite and use in the final post of the series. This is the third in a series of posts on investment planning. ![]() This post has been cited in the Carnival of Personal Finance published on 3 August 2009. ![]()
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