Build a month-by-month plan showing when you reach each buffer milestone alongside your debt plan.
By now you have four separate pieces of planning. Lesson 6.1 gave you a starter buffer amount and an order for splitting your money. Lesson 6.2 gave you your milestones, lesson 6.3 your windfall rule, and lesson 5.4 your debt repayment plan. If you keep them in separate places, none of them can show you the month you reach each buffer milestone. Putting all four on one sheet gives you a two-year view of where your future you money goes each month and when each milestone arrives.
The sheet takes about 30 minutes to build. Keep your repayment plan from lesson 5.4 open alongside you while you work, because you'll be copying figures from it.
Open a new tab next to your repayment plan and make five columns:
month amount to buffer amount to extra debt repayment running buffer balance notes
Number the month column 1 to 24, one row per month. In row 1, enter your current savings as your opening balance. Use the notes column for milestones and windfalls as you reach them.
Work down the rows. In each month, split your future you money between the buffer and extra debt repayment in the order you set in lesson 6.1. Copy the extra debt payments straight from your repayment plan, and put any future you money left over in the buffer column. Fill the running buffer balance from the top: last month's balance plus this month's amount to buffer.
When your expensive debt is cleared, the money that was paying it goes to the buffer from that month on. This is your switch month, and you mark it in the notes column. People often find it the most satisfying row to fill in.
Take Wei Ling (an example with invented figures). She starts with S$200 in savings, S$480 a month of future you money, a S$90 card minimum line in her budget and a starter buffer of S$1,000. Her month 1 is March.
In month 1 she puts S$480 into the buffer. In month 2 (April) she puts S$320 into the buffer and S$160 toward the card, and her balance reaches S$1,000, her starter buffer. From month 3 to month 7 nothing goes to the buffer. The card gets S$570 a month, which is her S$480 plus the S$90 minimum.
In month 8 (October) she clears the card with a final payment of S$128.07. The remaining S$441.93 of that month's S$570 goes to the buffer, and her balance is S$1,441.93. She marks month 8 as her switch month. In month 9 (November) the full S$570 goes to the buffer and her balance is S$2,011.93.
She also pays S$300 a month on a separate loan that ends in month 18. From month 19, that S$300 joins the S$570, so she puts S$870 a month into the buffer.
Enter your expected windfalls in the months they usually arrive, and apply your windfall rule to each one. Only the buffer share goes on this sheet. The rest goes to your goals and spending. A bonus is never guaranteed, so write down in the notes what happens if it doesn't come.
Wei Ling's bonus usually arrives in December, which is her month 10, and is about S$3,000 after CPF. Her windfall rule sends 60% to the buffer, so month 10 gets an extra S$1,800 on top of the usual S$570. She also enters another S$1,800 in month 22, the following December, and notes it as an assumption.
As you fill the running balance, mark the first month it reaches each milestone. For Wei Ling:
In month 10 (December) her balance is S$4,381.93, which passes one month of essential costs. In month 14 (April) her balance is S$6,661.93, which passes three months. In month 17 (July) her balance is S$8,371.93, past her full target of S$8,220.
Record each milestone date twice, once with the windfall and once without it. Without the December bonus, Wei Ling still passes one month in month 10, but three months moves to month 17 and the full target moves to month 20. So she expects to reach her full target in July of her second year, or October at the latest.
Keeping both dates matters if a bonus turns out smaller than you expected. You can see straight away how far the dates move, and a later date won't look like a failure.
Once your buffer reaches its full target, write a new destination for the monthly transfer in the notes. Otherwise the money tends to drift back into everyday spending. In month 17's notes, Wei Ling writes that from month 18 the S$570, and later the S$870, goes to her Japan fund and then to her next larger goal. Planning for big goals such as a wedding or a home, once the buffer is full, is covered in the course "Big goals: wedding, home, car and kids".
Before you call the sheet done, check it against your budget. Every amount in the buffer and debt columns has to come from your future you line or from a windfall. If any month needs more than that, adjust the plan and leave the budget as it is.
The finished sheet has 24 rows. Each row has an amount to buffer, an amount to extra debt and a running balance. The switch month is marked, and each milestone month is noted both with and without the windfall.
Copy your opening balance into row 1 and work down.
Build your buffer plan for the next 24 months and write down the month you expect to reach your full target.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).