Private liquidity calculation

from Wikipedia, the free encyclopedia

In the private liquidity calculation (also called income-expenditure calculation (EAR) ), the income and expenditure of a private person or a private household within a certain period of time are compared.

General

The private liquidity calculation is part of private financial planning , in which private households can use the same planning methods and instruments for their financial planning that business administration has developed for companies and public households . For companies, the liquidity calculation is called the cash flow or cash flow calculation , and for public budgets it is called the financial calculation .

The current capital requirement is provided by financing , in which a distinction must be made between internal and external financing . The main difference between companies and private households is that the latter often have little or no general financial education and therefore financial planning techniques without specialist knowledge do not lead to success.

construction

Private liquidity calculation in account form

The private liquidity calculation is structured like a public budget , in which the income and expenditure are opposed. In the private household, income is composed in particular of earned income ( net income ), investment income ( dividends , credit interest and other interest income ) and other income (such as monetary gifts , credit claims ). The expenses consist of living costs ( energy costs , property rent and ancillary costs , clothing , personal care , animal husbandry , food , insurance premiums ), debt servicing , leisure activities ( subscriptions , recreational sports , entertainment , vacation travel ) and capital expenditure (such as buying household items , maintenance and repairs ). The balance of this comparison results in a liquidity surplus or a liquidity deficit.

These individual items must be examined to see whether and to what extent they can be influenced by the private household. Fixed income and fixed expenses that are fixed by law or contract are not or can hardly be influenced . This applies above all to earned income, property rent, debt service and compulsory insurance . In contrast, variable income and expenditure can be influenced to a greater or lesser extent. This distinction is necessary in order to be able to take action on the result of the liquidity calculation.

Critical spending ratios

There are three main expense items that must be given special attention because they involve risky leverage . These are the rent burden ratio (the lever is the rental price level ), the debt service ratio (the lever is the interest rate ) and the pension ratio (the lever is the pension level ).

For them, the respective expenditure items are compared to the net income of the household. The rent burden rate should not exceed 30% of household income; it is currently 50% and more in large cities. Individuals are considered vulnerable if they have to spend more than 40% of their monthly household income on debt servicing. Around 60% of households used less than 20% of their net income for interest and repayments, less than 10% of households used more than 50% of their income, the average rate being 20%. If rents or lending rates rise with a relatively rigid net income, the respective quotas increase and can reach the critical point that represents a financial risk for the household. Because of the low pensions in the future, households must also factor in a provision quota of at least 15% of their net income, which must be saved as a capital investment .

activities

If the balance of the private liquidity calculation shows a liquidity deficit , the resulting lack of money can be closed by reducing or avoiding non-fixed expenditure ( renouncing consumption ) or by maximizing all variable income. In the worst case, moving to a smaller apartment or foregoing certain insurance policies must be taken into account. If these measures are inadequate or if they are ignored, there will inevitably be a default in payment of due liabilities ( e.g. arrears in rent ), which will result in a reaction from the creditors concerned ( warning , dunning notice , termination of rental contracts ). To avoid this, the household has to take out loans ( bank loans , personal loans ) to compensate for the liquidity deficit . In the worst case, borrowing can be an indicator of structural liquidity deficits, so that there is a risk of over-indebtedness in the medium term .

In the case of excess liquidity , the household can either increase its expenditure or save (e.g. as an investor in financial products ).

Areas of application of the private liquidity calculation

In private financial planning, the liquidity calculation is used to check whether a household is liquid or whether it is increasingly building up liabilities and the risk of insolvency (as-is analysis). If the liquidity calculation is carried out with plan numbers that represent a desired input and output behavior in the future, one speaks of a private budget . The preparation and regular control of a private budget serves to increase spending discipline and can help prevent excessive consumption and achieve savings goals.

As part of the scenario technique , the liquidity calculation is adapted to certain events or changed framework conditions (e.g. death of an earner, increased inflation rates, increased need for renovation of the home, application of tax structuring options, increased use of state subsidies) in order to assess whether these also occur Scenarios sufficient liquidity is guaranteed for the budget and whether there is an improvement in the liquidity situation.

In order to check the long-term creditworthiness of a borrower in the context of lending , credit institutions create an income-expenditure account adapted for this purpose .

aims

These measures must be based on the personal goals of the private household. One of the most important goals of the private household is to organize one's own finances . Specifically, when calculating liquidity, this means avoiding liquidity and financing risk . In this context, Henry Ford is credited with the quote that one can achieve wealth not only through income, but also through not spending. A private liquidity calculation therefore covers both income and expenditure.

literature

  • Günter Schmidt: Personal financial planning - models and methods of financial planning. Springer, Berlin 2011, ISBN 978-3642204586
  • CFP Board: Financial Planning Competency Handbook. Hoboken 2013, ISBN 978-1118470121
  • Jan Buschmann: Private financial planning: Analysis of the process in private financial planning. GRIN Verlag 2008, e-book
  • Jörg Paßmann: Key figure systems for private assets and finances: Transfer options for operational instruments. GRIN Verlag 2012, ISBN 978-3869431819

Individual evidence

  1. ^ Helmut Sellien, Finanzplanung , 1953, p. 5
  2. ↑ Liquidity Working Group of the Federal Committee (ed.), Liquidity calculation in the service of corporate management , 1962, p. 16
  3. ↑ Creditreform Wirtschaftsforschung of November 13, 2018, SchuldnerAtlas Deutschland 2018 , p. 44
  4. ↑ Jesse Bricker / Brian Bucks / Arthur Kennickell / Traci Mach / Kevin Moore, Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009 , Federal Reserve Board Working Paper 2011-07, March 2011, p. 17
  5. ↑ Deutsche Bundesbank , Assets and Finances of Private Households in Germany: Results of the 2014 Asset Survey , March 2016, p. 75
  6. ↑ Wirtschafts-Trend Zeitschriftenverlag, Profil , Volume 37, 2006, p. 91
  7. ↑ Roland Leonhardt, Wisdom of Famous Poets and Thinkers , 2011, p. 244