Cashflow planning in the digital era

Online retailing may seem to help consumers save money through lower prices, but its convenience is a double-edged sword. 

IN 2016, Ivan starting his financial planning process with Avallis. One of his goals was to increase his savings. Despite trying for the last few years, he found it difficult to stick to a savings regime.

He is not alone.

Consumer spending habits have changed drastically over the past few years, with a huge sway towards e-commerce platforms. From lower prices to free delivery, consumers are spoilt for choice.

Brick-and-mortar businesses with high overheads continue to be on the losing end of the retail market. Even services such as the taxi industry is facing an upheaval, with Grab and Uber entering the scene and changing the cabbing landscape completely.

Online retailing may seem to help consumers save money through lower prices, but its convenience is a double-edged sword. Many of us end up overspending, making impulse purchases on the presumption of cost savings or buying things that we do not need just to hit the minimum purchase amount for free delivery and extra savings.

The power of peer influence on social media platforms also shapes spending behaviour. Exotic holiday destinations, lavish birthday parties for children or photos of expensive dining locations appear on our social media news feeds daily.

Within hours of the announcement of the new iPhone, numerous social-media postings on purchase considerations for these new devices appeared.

In the face of relentless bombardment of online advertising and marketing updates, cashflow planning becomes more important than ever if one is to stay on budget.

Instead of staying connected to a group of friends via social media, we may end up chasing lifestyles that are beyond our means. Regular reviews of our expenditure are therefore essential to ensure we do not over-commit financially.

A regular cashflow review not only provides clear understanding of your inflow and outflow of funds, but also allows you to plan your finances based on your current stage of life.

Cashflow planning consists of three steps: tracking, targeting and trimming.


This phase consists of tracking daily expenses over a period of one to three months. Certain expected expenses such as annual festive spending should be included in this planning phase. With the monthly and estimated annual expenses captured, your annual savings ability can be determined. If these savings fall short of your target by a stretch, a relook at the cashflow sheet is necessary.


Once we have determined your savings ability, we can target to change certain spending habits. A S$6 gourmet coffee daily can amount to $2,149 in a year. Limiting expensive coffee to two cups a week and switching to cheaper coffee that costs S$1.30 on other days can add up to an extra S$100 in savings each month. Such targets should be set for items which are deemed as luxury.


After setting a target, trimming of expenses will take place over the next few months. It is important to revisit the cashflow sheet after three months to determine the efficacy of the trimming process.

Adjustment to the cashflow can be made along the way until the figures are realistic enough to be adhered to.

It is recommended to have two separate bank accounts; one for general expenses and one for savings. By setting aside a general expense account, you can limit your expenses based on your targeted expenditure. You should review your cashflow whenever there are changes to your income or financial commitment.


Ivan started two investment portfolios in October 2016.

Having Avallis Portfolio Asset Management (PAM) to grow his funds, he is on track to achieve his long-term goal over a period of 20 years. Two portfolios covering the Asian Market Equities (AM) and Developed Market Equities (DM) were recommended for diversification across different regions.

His portfolio now stands at $82,841.13, which is up around 3.6 per cent from last October. It is currently on a neutral 50/50 weightage between equities and bonds.

Next month, he will undergo his annual review, which is when his goals, objectives and the performance of his investment will be assessed with his situation at that time.

Changes and adjustments will be recommended, if necessary, to ensure his retirement plans are on track.

I would recommend an overweight in Asian markets for new entrants. The outlook for the next few months remains positive for equities, with market indicators still pointing towards growth.

However, with markets heading into their ninth year of growth, investors should exercise caution and maintain a diversified portfolio.