My cash flow Thought Process – Super grateful for my Emergency Fund

Super grateful for my Emergency Fund

Events of the past two weeks have changed everything that I intended to do with money for the short-term. However long that may be.

Life has changed for me personally in a huge way in the past few weeks. One week ago, I completed on a much bigger mortgage (from £200k up to £325k) and my ex-partner finally moved out after ten months of living horribly together. I bought him out and kept the family home. A new budget had been worked out and knew exactly how much money I needed to earn each month to keep my boys and I afloat.

I had come up with a solid plan to carefully manage my income. Depending on my monthly turnover there would an allocation for tax, bills, holidays, emergency fund, investments, pension and mortgage over-payment. This has now all been forgotten. I will share my strategy though when we are back to more certain times.

For the moment this is my plan. I urge you to come up with a plan for 2020 as well.

My Income is random

I never really know what I will earn on a monthly basis. I have a rough idea based on invoices outstanding, regular work and future work agreed. On that basis I know what my March income will be, and my April. But for May and beyond its an unknown. And as the emails have gone quiet with prospective new work then I can only assume that from May onwards my income drops to the bare minimum of contracted work, advertising revenue which has halved and affiliate revenue which is much smaller.

For the moment my money goes into three pots. Firstly the bills pot where I need £2,700 each month, then I put money into my tax pot (and I put in roughly 10% of my turnover into this pot for the moment) and then any extra money earned on top goes into my emergency fund pot.

I have an emergency fund in place, held with and Starling

Fortunately, I was able to bank some emergency money in February and have been able to add a bigger chunk in March, so I do have £5k held back for emergencies.

I keep some of this money in my Starling Business Account.

How will I Survive Going Forward?

As I mentioned my income is going to drop from May, and I have worst case planned out my income and costs for the rest of 2020. It looks like I will be short of around £700 (crap) each month from May until August. I am hoping that things start to pick up from September.

I will have enough in my emergency fund to get through this period, just. If the tough times, go beyond September and my self-employed work doesn’t pick up by then…I am screwed. I will have to rely on credit cards or loans, I will need to delay tax payments. But that isn’t going to happen, we will get through this.