The 21-day Reality Cash Flow


Question:  I often end up not knowing where my salary went. Do you know of a budgeting tool that can help me better manage my money?   —asked at “Ask a friend, ask Efren” free service available at, Facebook and SMS.

Answer:  For better money management, we at the Personal Finance Advisers Philippines Corp. (PFA) recommend the 21-day reality cash flow. All you will need is a pen and a pocket-sized notebook.

Upon waking up on Day 1 of the 21-day program, count your cash on hand.  This will be cash that is literally on your person and very close to you like your wallet or purse.  Do not include cash in any type of savings account, not even in your piggy banks, and much less investments. Write that down on your notebook as the “Beginning Cash” for Day 1.

As you start out on Day 1, you may need to get additional cash for transportation, food, or even a major expense.  If you withdraw money from an ATM, your cash on hand will increase.  So, under a column for “Sources of Cash” in your notebook, jot down the entry “ATM withdrawal” and the corresponding amount.

If you borrow money to fund any expense, your cash on hand will also increase. Still under the column sources of cash, jot down the entry “Cash Loan from Whomever” and the corresponding amount.

Now, what if you used a credit card for an expense like buying gasoline for your vehicle? While your cash on hand did not physically increase, you will still need to jot down under source of cash the entry “Credit Card Loan” with the corresponding amount. Then under a new column called “Uses of Cash,” write down “Gasoline” and the corresponding amount.

Apart from credit card purchases, also jot down under uses of cash all your expenses for Day 1. You may want to lump expenses into major categories like food, transportation, utilities and the like for easier monitoring.

Before you go to bed at the end of Day 1, bust out your notebook and compute your ending cash on hand.  This will be equal to beginning cash plus sources of cash minus uses of cash. Your ending cash on hand should balance with what you have on your person and in your wallet or purse.

When you get up on Day 2, your ending cash for Day 1 is now your beginning cash for Day 2.  Do the process all over again up to Day 7. By the end of Day 7, total all of your sources of cash and uses of cash and you will get a pretty good idea of how your money flows through you. This is what we call the realization stage. It is also at this point that you will want to make some “New Week” resolutions on how to manage your cash flow.

But realization is just half of the goal.  The other is making the process a habit.  So why not repeat the reality cash flow for the balance of 14 days. Why 14? Because they say that it takes 21 days to form a new habit.  And believe you me, this process has worked with the more than 8,000 people we trained at PFA.

You will also notice that toward the end of the 21-day reality cash flow, you will not even need your notebook anymore because you will have developed in your brain a working number on which to manage your cash flow.

Some fear that they might forget to track their cash flow given the many things they do in a day.  As an aid, we developed a free coaching program called EnRich™ 365.  If you sign up through, you can get 15 days of free lessons on personal finance that will also serve as your reminder to pursue the 21-day reality cash flow. And what about the difference of six days?  As we said, you probably will not need the reminders by around the 15th day because you would have formed the habit of tracking your cash flow.

Try the 21-day reality cash flow.  You have nothing to lose and everything to gain.


Efren Ll. Cruz is a Registered Financial Planner of RFP Philippines. He is best selling book author of Pwede Na! (A Complete Guide to Personal Finance) in 2004, and is the chairman and president of the Personal Finance Advisers Philippines Corporation.



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