Each Monday morning, I plan to post my thoughts on Organizing Your Finances. Through this series, I hope to share a tip or two that address a common problem that many of us face in our daily lives — that of organizing our finances. I’d love to hear your thoughts on this initiative and would love it more if you could share a tip of your own. And, as always, do spread the word if you find this useful.

Last week’s exercise involved identifying your annual expenses. Once you have this list written down, the next logical step is to chart a plan for meeting these expenses.

In the past, I’ve sometimes been blindsided by my annual expenses and I always used to think “Wouldn’t it be wonderful if I could save regularly so that when an annual expense is due the money is already there in my account?” For a long time, however, I didn’t actually do anything about it.

One day, I set up a cash flow model for my annual expenses using Microsoft Excel (you can download a template here) and arrived at a sum that I should save each month. I set aside this sum every month from my salary. Whenever an expense is due, I simply issue a check from this saved amount. Result: no rummaging for cash; no credit card usage; zero stress.

Given my stress-free experiences with this method, I encourage you to first identify and then save regularly for your annual expenses. Psychologically, you can simply treat this monthly sum as another EMI payment.

What do you think? Do you follow a different method?

PS: Let me know if you’re having any difficulty in understanding my template.