LECTURE 6 – INTRODUCTION TO PERSONAL CASH BUDGETS

Cash flow forecasts or budgets:

Sandy Lane is a new marketing student who has just started his first year at
university in Bristol. Before coming to university, he arranges to go skiing with
his old school friends during the Christmas break.

Sandy needs £1,200 at the end of December to pay for the skiing trip. Sandy knows
that he will receive a tuition grant of £9,250 to cover his university fees this will be
paid directly into the university and so will not enter his bank account or cash budget.
He will receive a further maintenance loan of £5,500 p.a. (payable at the start of the
first term). His parents are also planning to give him £100 at the start of each term
for books etc. and he has a part time job working 60 hours a month in Tesco where
he earns £7.20 an hour

He predicts his cash out flows would be as follows:

£700 Laptop payable in September

£650 Accommodation fees payable each month
£250 Food cost per month
£180 Books payable in September
£30 Transport per month in and out of university and Bristol city
centre
£350 Socialising and clubs per month
£100 Sundries per month (things he has not included anywhere
else)

It is now September and Sandy is going to prepare a cash flow forecast or

budget for the next four months to December to see if he will have enough
money to go skiing. When he started university in September he had £52 in his
bank account. Answer the following questions:

Will Sandy be able to go skiing?

What can Sandy do to rectify this position?

Cash Flow budget for Sandy Lane
Narrative September October November December Total
Cash In/Receipts

Total Cash In

Cash Out/Payments

Total Cash Out

Net Receipts
Opening Balance
Closing Balance

This is a new start for you in university and one of the most important things to learn
is how to manage your cash- so you have enough to go out and enjoy life. You are
going to prepare a cash flow forecast or BUDGET for yourself.

Your personal cash flow for the term one at university:

Narrative September October November December Total
Cash In/
Receipts

Total
Receipts

Cash out/
Payments

Total
Payments
Net Receipts
Opening
Balance
Closing
Balance