__Earlier, we began a three-part series on [cash flow planning](https://soundmindinvesting.com/articles/budgeting-is-about-having-more)  —otherwise (and not so popularly!) known as budgeting. As part of that first article, I pointed to our Recommended Cash Flow Guidelines (in the [Downloads section](https://soundmindinvesting.com/resources/downloads) of the SMI website), which show what a plan might look like for households that earn various levels of income.__

I thought it would be helpful to explain some of the assumptions I made in developing those guidelines and to share some of the conclusions that seemed to jump off the spreadsheet while putting the guidelines together.

- If were going to live generously and save and invest adequately, it’s important to allocate money to those priorities before deciding how much we can afford to spend on a house, clothing, vacations, entertainment, and all the rest. That’s why those categories are at the top of the guidelines and the Cash Flow Plan form (also in the Downloads section).
- I set generosity at a tithe, or 10% of gross income, regardless of income. That’s where God started His Old Testament followers ([Leviticus 27:30](https://biblia.com/bible/niv/Lev%2027.30)), it’s a practice Jesus affirmed ([Matthew 23:23](https://biblia.com/bible/niv/Matt%2023.23)), *and,* because the Bible mentions both tithes and offerings, it’s clearly not God’s intended stopping point.
- I set saving/investing at 10% of gross income on the lowest end of the income spectrum and grew it incrementally to 15% at the highest end. Ten percent seems like a minimal threshold in order to prepare for our later years. And, if we want to help our kids pay for college, we’ll have to save more than that.
- In order to live generously and save/invest adequately, it’s essential to have no debt other than a reasonable mortgage. I don’t see how to live out those priorities otherwise. If you have other debts, I recommend spending less in some of the discretionary categories and putting the money you free up toward the [accelerated payoff of your debts.](https://soundmindinvesting.com/articles/the-7-essential-steps-to-leaving-debt-behind)
- Housing is most people’s largest expense category, which is why it’s so important to [keep spending on this category *reasonable.](https://soundmindinvesting.com/articles/making-sure-your-house-doesnt-own-you1)*  By that, I mean spending no more than 25% of monthly gross income on the combination of your mortgage, property taxes, and homeowners insurance — preferably no more than 20%.
- In the Recommended Housing Guidelines (also in the Downloads section), you’ll see the assumptions I made for property taxes and homeowners insurance. If your costs differ, that’ll impact how much of a mortgage you can afford.
- The cost of living in different parts of the country differs greatly. If you live in an expensive part of the country, you’ll need an unusually high income or you’ll have to make some trade-offs in the various discretionary spending categories.
- The cost of healthcare differs greatly as well. Some families are covered by generously-subsidized plans, others are on their own. If you pay a small fortune for healthcare, you might want to consider using a [health care sharing ministry](https://soundmindinvesting.com/articles/health-care-sharing-ministries-a-christian-alternative-to-health-insurance).

To develop a plan tailored to your unique situation, here’s the process I recommend. First, enter your gross income. Then enter amounts for generosity, saving/investing, and debt payments. Then fill in your essential expenses (i.e., food, utilities, insurance). Last, see how much you have left over for discretionary expenses (i.e., entertainment, clothing, vacations).

I’d appreciate hearing your feedback on all of this. Are there any areas where the guidelines or assumptions seem wildly off base? If you live in a high cost-of-living area, how do you make it work? What have you had to do in order to live generously and save and invest adequately? If you pay a lot for health care, how do you make *that* work?

Clearly, cash flow planning is not a one-size-fits all proposition. But hopefully the Recommended Cash Flow Guidelines are helpful for putting together a plan that works for you.

*[Image](https://soundmindinvesting.com/img/asset/Y2xvdWQvY2FzaC1mbG93LXBsYW5uaW5nLmpwZw==?fit=crop&w=1660&h=896&s=b7c6eeaabf3587e0141a80570d9ea98e) used with permission. *

Since 1990, do-it-yourself Christian investors have relied on SMI for proven strategies and trustworthy guidance.

Sound Mind Investing

Personal Finance

Clearly, cash flow planning is not a one-size-fits all proposition, but here are some guidelines.

SPENDING | Nov 2, 2023

How Does YOUR Cash Flow?

By: Matt Bell

Since 1990, do-it-yourself Christian investors have relied on SMI for proven strategies and trustworthy guidance.

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