Your Financial Life, Simplified: Build, Plan, Live

Let’s face it—managing your finances can feel overwhelming. Spreadsheets, jargon, long articles… not for everyone. But what if financial planning could be simple, visual, and actionable? In this guide, you’ll learn how to assess, plan, and execute a strategy for your financial well-being—without drowning in text.

🛟 Step 1: Build Your Safety Net

Before you think about investing, upgrading your car, or taking that trip, you need one thing: security.Here's your basic formula: Revenue – Expenses = Result. If your result is close to zero (or worse), your focus should be on stability.

📦 Structure your money into four separate buckets:

💼 Central Account → Where you receive salary, pay core bills

🚨 Emergency Account → For surprises: broken tooth, car trouble, job loss

💸 Savings Account → For short-term goals

🧓 Retirement Account → For long-term security

💳 Step 2: Ditch the Debts

You can’t build a future if you’re chained to your past.
To gain momentum, shed the weight.

🔻 Start cutting what’s non-essential and non-committed:

• Streaming subscriptions

• That 10th watch

• Credit card debt with high interest

The less essential and less committed, the faster it should go.

🔮 Step 3: Plan for the Future

Once you’ve secured your present and ditched your debts, it’s time to think forward.

• Extra income? Route it to retirement.

• Positive monthly balance? Split it between emergency, savings, and investments.

• What’s left? Only then consider spending it.

📌 Golden rule: Do this before spending, not after.
Pay the future before you pay the present.

🧠 Step 4: Assess and Reassess

Your finances aren’t static. Your life evolves. So should your plan.

Here’s a simple framework to help you decide what to keep or cut:

🔁 Simple Flow: Assess > Plan > Execute > Live

You don’t need to be a finance expert.
You just need a clear path and the discipline to walk it.

This method works because it’s visual, tangible, and adaptable.

🚀 Ready to Begin?

Start by answering 3 simple questions:

1. What’s your actual monthly income?

2. What are your essential vs. non-essential expenses?

3. How much can you set aside before you spend?

Don’t wait for the “perfect” time.
Start small. Start now. Start smart.

My mum used to say: "You must have installments to pay"

There’s a saying I used to hear when I was younger: “Start building your assets as early as possible.”

Back then, the idea behind it seemed pretty simple:

• a) If you don’t have the cash to buy something outright, it’s often better to use financing and get the asset now rather than wait and save up.

• b) Let’s face it—making a promise to yourself isn’t quite the same as having to stick to a payment plan with a bank.

As I got older, I realized there’s more to this strategy than just taking on debt. For it to really work, a few things need to be in place:

• a) A solid plan: You need to know how much you can realistically commit and stick to a budget. Without that discipline, it’s easy to get in over your head and end up in financial trouble.

• b) Willingness to deal with the downsides: Debt comes with a price—interest, insurance, and possible fees if you miss a payment or hit a rough patch.

Of course, whether this approach makes sense really depends on the market. For example, in the U.S., mortgage rates for first-time buyers are often low enough that buying a home ends up being cheaper—and smarter—than renting.

Full Budget

When setting a budget, the most common approach is defining how much money to allocate for expenses. However, to create a fully comprehensive plan, it's equally important to define how much money to pursue as revenue—thus, planning for the balance between income and expenses.

For instance, this includes goals like buying a house, upgrading your car, paying off debts, or making other investments.

By balancing both sides—revenue and expenses—you create a more effective and sustainable financial plan.

CONTINUATION: The Accounting that Matters for You

Inflow: The money that comes in for various reasons, most commonly defined as income or revenue.

Outflow: The money that goes out for various reasons, most commonly defined as expenses.

Income (Revenue):
For individuals, income refers to money received in exchange for work (e.g., salary or fees for professional services). It can also come from returns (e.g., rent from property or interest on loans or investments). For businesses, the term "revenue" is used, which essentially means the same as income but applies to companies. Appreciation in value of assets (such as property or vehicles) is also considered income, even if it doesn’t involve cash inflow—this value is recognized as income when the asset is sold.

Expenses:
Money spent (but not invested) in exchange for benefits (e.g., food, rent, fuel), obligations (e.g., taxes), or penalties (e.g., fines). Depreciation of assets (such as property or vehicles) is also an expense, as it reduces the asset’s value.

Cash or Accrual-Based Accounting:
A key concept when analyzing income and expenses to understand the net result for a specific period. Cash-based accounting considers when cash is received or paid, regardless of the date the transaction was committed. For example, if a cable bill for January 2015 is due on February 5th but paid on February 10th, cash-based accounting records the payment date (February 10th). In contrast, accrual-based accounting considers the reference date of the bill (January 2015).

Result (Profit and Loss):
The result is evaluated over a specific period (usually monthly or yearly). While most businesses use profit and loss (P&L) statements, these can also be applied to personal finance. Profit occurs when income exceeds expenses, while a loss happens when expenses are greater than income.

Asset:
Assets are possessions that can be converted into cash or rights. These include cash, accounts (checking or savings), receivables (loans given), property (homes, land, art), vehicles, investments, and other valuable items.

Investment:
Cash or rights converted into assets for future benefits (e.g., interest or appreciation). Investments typically carry a certain level of risk. A house is an asset by definition, but a second house bought for renting purposes is considered an investment, as it aims for future appreciation and generates income through rent.

Savings:
Money set aside for emergencies, not typically considered an investment. While savings might yield some return (e.g., interest), the primary purpose is security. Retirement accounts are generally categorized as savings.

Liability:
Financial obligations owed to others, such as debts (e.g., loans or credit). These obligations are acquired in exchange for goods or services (e.g., a car loan, mortgage, or borrowed money).

Net Worth (Balance Sheet):
Net worth is the difference between total assets and total liabilities. A positive net worth means assets exceed liabilities. The Balance Sheet, often used by companies, is a financial report showing assets, liabilities, and net worth.

Chart of Accounts:
A chart of accounts is a list of predefined accounts where income, expenses, assets, and liabilities are tracked and categorized.

Budget:
A financial plan for a set period (e.g., monthly or annually) that forecasts income and expenses. Stay tuned for more on Garnize.com for a full guide on budgeting.

Cash Flow:
A report showing the balance of an account (usually assets or liabilities) over time, helping to track financial movements. More on Cash Flow.

Coming soon - A sample of a personal P&L and Net Worth reports.

The Accounting that matters for you

Not all inflows should be classified as revenues, just as not all outflows can be considered expenses.

So, what exactly are income and expenses? Should they be analyzed using the accrual basis or cash basis of accounting?

Stay tuned for answers coming soon!

The Power of a Cash Flow

A new car, a new house, a friend asking for a loan, or even the upcoming expenses of children starting school in a few years—these are all financial decisions that impact our budgets. Many people face these challenges, but how many can make informed, data-driven decisions rather than relying on intuition?

What methods and tools can help forecast the impact of these expenses—both now and in the future—on checking or savings account balances?

This is where Cash Flow comes in—a straightforward yet powerful approach that combines current balances with projected inflows and outflows over time.

Should I outline some practical ways to use cash flow effectively? And if so, which tools would be most helpful? I’m eager to dive into this topic. However, rather than simply presenting a theory, I’d love to illustrate its power using real-life cases.

So, I invite you—my audience—to share your everyday financial challenges. Let’s explore together how cash flow management can bring clarity and balance to your budget.

The Money Never Sleeps

Did this phrase originate from the 2010 American drama film Wall Street: The Money Never Sleeps? Perhaps—though the concept of money being ever-present and constantly moving has long been around.

Now, let's address some common dilemmas people face when it comes to managing money:

• Tracking expenses

• Balancing a budget

• Saving for the future

• Investing

• Preparing for retirement

• Achieving financial independence

Alongside these dilemmas, we have various beliefs, sayings, and quotes that guide our financial decisions, such as:

• "Money out, money in" (of course, only when money is in first!)

• "Put your money to work for you..."

For nearly 20 years, I’ve been tracking my finances using specialized software, and I wholeheartedly advocate for managing personal finances—regardless of the tool you use. In fact, why not use a dedicated software to help you stay on top of your finances?

This section will dive into topics like these, offering tips and tricks to make managing your personal finances more effective.

Stay tuned for several tricks & tips coming soon!