A Better Way to Manage Your Everyday Money - Book - Page 109
When you first set up a periodic savings, there may not be twelve months before the next
payment is due. You can handle this situation in one of two ways.
● Add the savings with the set aside amount calculated for twelve months ($30.83). When
the first payment is made, the difference between the total set aside to the savings ledger
and the first payment amount will be deducted from the Unallocated ledger.
● Calculate the amount to set aside for the first payment using the fewer number of months
until the payment is due. For example, if the first payment is due in six months the initial
set aside amount is $61.67 ($370 / 6).
Add the savings with this higher fixed
amount. Then add a future amount
change to the savings for the normal set
aside amount ($30.83) with the change
taking effect on the 1st of the month
after the first payment.
PerNetFlow adjusts the savings
set-aside amounts in your spreadsheet
for the future amount change.
Ongoing short-term savings
Ongoing expenses are expected, but when they will happen or how much they will cost is not
known. Examples could include:
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Auto maintenance (e.g., regular service, new battery, minor repairs)
Home repairs (e.g., leaky faucet, clogged drain, broken window)
Seasonal landscaping work
Entertainment (e.g., concerts, movie premiers, tulip festivals)
A fixed amount short-term savings for an ongoing expense smooths the impact on your net
cashflow of a known and possibly large expense that will happen sporadically. The savings
ledger is not linked to a bill or credit card because neither the expense nor how it will be paid are
known in advance.
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