Date of the Meetup: 8 of October 2016
Speaker: Sebastien Aguilar
This past meeting was an exciting display by co-chair Sebastien Aguilar, in which he demonstrated on screen how he tracks his cash flow over time and how he graphs both where his income goes and his projected wealth for the future. Amazingly, all the displays were done via simple excel sheets.
The presentation was fabulous and started with an introduction personal finance with the reminder about why learning about money is so important. Despite playing a very important role our lives, it’s a topic rarely discussed in details at school or families!
We then discussed the importance of taking control of your money, how it helps you reach your goals in life, how it gives you a feeling of control and help you build self-confidence. Ultimately it helps you in many other areas of your life (relationships, work, etc.)
The group then discussed how one can manage financial goals, starting from the definition of the goal to the development of a plan to achieve that goal. There are many kind of financial goals and here are some examples:
Become financially independent from my family (sustain my own expenses)
Pay out my debt
Build my 6-month emergency fund
Save for my next rent payment
Save for a car purchase
Save for my next holiday
Save for a down payment
Save for my kids education
Save for a world tour
Save for retirement
Save to invest
Save to become financially independent
We then discussed the basics of tracking money and wealth. It all comes down to tracking your cash flow (income and expenses) and keep track of your net worth (assets minus liabilities).
Here is the step by step approach proposed by Sebastien:
Select a platform: Excel sheet, software, etc.
List all income, expenses, assets and liabilities.
Take a snapshot: what are the values of all of these today?
Track value for at least one full year (it’s even better if you get this data for the past year)
Forecast these values for the future based on assumptions.
Sebastien then proposed to look at his own cash flow and money history as an example. In his Excel sheet, Sebastien tracks all his income, savings and investments (“pay yourself first!”), expenses, and the value of his accounts. With one line per month, and one column for each category of transaction or account, the concept of the excel file is fairly simple.
From there, many financial aspects can be studied. Here are some of the questions you can answer:
How much did I earn in total? How much did I spend? How much did I save and/or invest?
Where is my income going? Am I happy with my saving rate?
When will I have my emergency fund?
How long will it take for me to save XXX?
Can I pay my debt early?
Can I afford to XXX?
Would it help if I reduce my expenses in XXX?
When will I have enough for my down payment?
Sebastien then entertained us with a case study. As a group we studied the situation of “Jack” who was not saving very much. In this interactive session we found ways to alter an imaginary his spending habits (budget) and saw the savings grow for the years to come. We helped Jack plan for his future rent payment and combine that with his car purchase. We also helped him start his investments! This made us all consider how we can implement minute changes to yield real results.
The turnout was great, with many enthusiastic questions and comments as usual. The message from Sebastien was clear: If we want to gain control over our financial life, tracking it is essential. And build a better financial future, we need to get an idea of what it will look like!
And the end of the session, Sebastien offered to share the excel template used for the case study. This is definitely a good starting point for anyone interested in taking better control of his finances. If you are interested, feel free to contact him directly!
See you at the next event!