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How to make sure that you always have money for short-term goals?

This article gives you an easy-to-use tool to create, save and track short-term goals to make sure that you have money to spend on them.

How to make sure that you always have money for short-term goals?


Posted on 26 Apr 2023
Contact Muthu Kannan (aka Manki) @mkannan
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7 mins read
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This article gives you an easy-to-use tool to create, save and track short-term goals to make sure that you have money to spend on them.

How to make sure that you always have money for short-term goals?

This article is a part of our detailed article series on the concept of a Sinking Fund. Ensure you have read the other parts here:

Disclaimer: Fund names mentioned in the article and in the video are for example purpose and are not recommendations for investing in those funds.

This article is a Guest Post from one of Arthgyaan’s earliest readers who is a fellow personal finance enthusiast.

About the author: Muthu Kannan, also known as Manki, is a software engineer by profession. He is intrigued by all sorts of things in life. One of them happens to be personal finance and investing.

In the personal finance space, his passions include teaching others (which is just a fancy name for learning by answering other people’s questions), building tools (mostly spreadsheets as of now), and writing about his revelations occasionally.

Readers of Arthgyaan may be interested in his blog posts about personal finance. Links to his other work and social media handles are on his home page manki.in.

Now over to Muthu Kannan (aka Manki).

📚 Topics covered:

Introduction

Let me start by stating a few things to set the context:

  • I like to stay organised. I save a small amount every month for close to 8 different recurring expenditures. I want to clearly see how much money I have saved up for each of those needs.
  • I like mutual funds a lot more than I like bank accounts and deposits. I like mutual funds because (i) they are more resilient than banks are, and (ii) they are more flexible. With mutual funds, I can save without having to decide in advance how much money I’ll save each month and for how many months. There is no predetermined “maturity” date when I must take my money and leave.

When I discovered Jupiter Pots, I became a fan instantly. After using Jupiter Pots for a few months, I wanted the same functionality for mutual funds. Within a few months, I got the motivation to make a spreadsheet that’s functionally equivalent to Jupiter Pots! In this post, I am going to show an overview of how I use that spreadsheet.

The spreadsheet is available for anyone to inspect or play with. Open the spreadsheet and make a copy (File > Make a copy) if you want to try it out. (You can look at the “info” tab of the spreadsheet to see if the original spreadsheet has changed after you copied it.)

Editor’s note: Please login to your Google/GMail account on a PC/Laptop/Mac before clicking the link. This way, you will create your copy of the sheet.

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Anatomy of the spreadsheet

This spreadsheet has 4 sheets:

  • All individual transactions are entered in the ‘transactions’ sheet.
  • The goals for which I am saving money are entered in the ‘goals’ sheet. (This is the data source for the ‘Goal’ column in the ‘transactions’ sheet.)
  • The ‘summary’ sheet shows me the summary of how much money is saved up for each goal.
  • The ‘funds’ sheet contains the list of mutual funds I can use. If your favourite fund is not in this sheet, adding it is straightforward.

Finally, there is an “info” sheet which contains meta information, such as when the spreadsheet was last updated, links to this blog post and demo video, etc.


Goal-based-investing plan

How to use the spreadsheet

Let’s say your laptop is becoming fairly old, and you want to save every month to buy a new laptop.

Add the laptop purchase as a saving goal

The spreadsheet already has some sample goals. Add your goal to the list. (Feel free to delete the sample ones if you decide to use the tracker!)

Add or Remove goals

Now the new goal will automatically show up on the ‘Goal’ column of the ‘transactions’ sheet.

Entering Goals

Add transactions

Let’s say you have bought Quantum Liquid fund for â‚č8,000 towards your laptop purchase goal. To track this, you’ll add a new entry to the ‘transactions’ sheet. I like to keep my records reverse-chronological (i.e. most recent first) so I add new rows at the top, but the order within the sheet does not matter. After inputting data for columns A through E, the row looks like this:

One Row

Columns F through I can be calculated using formulas. Copy-paste these columns from a neighbouring row, and the values will be populated:

One Row with Units

Something to keep in mind: Google Finance has a lag in getting the latest NAVs. If the formula does not show a value for your transaction, you may just have to wait for a day or two.

Summary sheet shows goal-wise corpus

Now if you switch to the ‘summary’ sheet, you’ll see that a new row has been added for the ‘Laptop purchase’ goal. (The column E is manually added. If a cell is empty, copy-paste the E cell from a neighbouring row.) You can see that the â‚č8,000 invested for laptop purchase has now grown to â‚č8,021.78.

Summary Sheet

Here is a video tutorial for the sheet:

Other operations

When you have saved enough and sell your MF units to buy the laptop, you’ll add a ‘Draw’ transaction and specify the amount (in INR) you have withdrawn. You can also remove old goals from the ‘goals’ sheet to keep the ‘goal’ dropdown clutter-free.

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Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
OR
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

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Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled How to make sure that you always have money for short-term goals? first appeared on 26 Apr 2023 at https://arthgyaan.com


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