Loan Repayments without Stress – Liquidity Planning

Again and again it can happen that a loan is the solution from a financial emergency or an unscheduled investment wants to be financed. What is an absolute must for companies and founders in financial planning, many private borrowers often neglected criminally: the liquidity planning.

The result: the credit rates are too high and leave little room for maneuver to cover the cost of living. This is remedied by forward-looking liquidity planning, often referred to as the budget in the private sector.

What does liquidity planning mean?

What does liquidity planning mean?

Liquidity can be colloquially translated as “being liquid / staying”. This means nothing more than having sufficient financial resources at all times to avoid financial difficulties. This affects the regular cost of living as well as unexpected purchases that are necessary.

With regard to a quick repayment of the installment loan, many people calculate the monthly installments without considering any imponderables. They forget when calculating the monthly loan installments, that there can always come situations in which money is needed that is not planned in everyday life. The consequence: every unplanned event leads to payment difficulties. This must be prevented.

Which factors should be considered in the liquidity planning?

Which factors should be considered in the liquidity planning?

Liquidity planning involves both revenue and expenditure. These are calculated against each other to determine when and how much money is available.


Liquidity planning initially involves all regular costs over the entire term of the loan (in contrast, companies usually plan for at least three months, but better for one year).

  • Rental costs
  • additional costs
  • Electricity and possibly water
  • Food, clothing and hygiene articles, where a monthly average rate is determined
  • Club contributions, gym
  • Leisure activities (cinema, concerts, eating out, etc.) – here is an estimate based on experience
  • fuel costs
  • Kindergarten / Hort Posts
  • monthly costs for telephone, internet and mobile phone
  • party membership
  • GEZ fees
  • Account management fees

Entrepreneurs who employ employees must also include the personnel costs, including non-wage labor costs, as well as regular occupational insurance in the planning. This can be a public liability or accident insurance or include contributions to the professional association or other associations. In addition, there are travel costs and operating needs. Depreciation is not taken into account because they are not expense-related.

Also to be considered are costs that occur only rarely in the year. This can be the liability insurance as well as the tax for the motor vehicle.

For entrepreneurs, an income tax advance payment is usually payable. Here, it is important to consider payments on a regular basis or to base them directly on net receipts, not including the expected income tax. However, it is also possible to set aside the tax separately as a reserve until the payment date.


In addition to the expenses, the revenues are taken into account in the liquidity planning. This is the regular salary or for self-employed or freelancers, the average net income and additional bonuses such as holiday and Christmas bonus. Alternatively, pensions, unemployment benefits or Hartz4 benefits are also regular incomes. In addition, there are income from the rental of residential or commercial space, child benefit, jobs of the partner or regular returns.

  • Salary, salary, pension or ALG
  • child benefit
  • Alimony
  • Rental income
  • parental benefits
  • Interest income from savings accounts


There may always be changes that affect the financial situation. This may be a move that involves a change of job, a pregnancy, or a reduction in working hours, which lowers the salary. Especially with fixed-term contracts, a cautious calculation is important. Of course, such changes can not be reflected in fixed numbers in the planning. If there is a possibility that such a case will occur – which should be taken into account especially for longer loan terms – it is advisable to plan for a sufficient buffer.

  • Pregnancy – and thus the loss of a household income
  • operational changes in working time models
  • Fixed-term contracts – in the worst case abolition of employment and ALG

Positive changes, such as inheritances, salary increases or promotions, are not included in the calculation or, if they occur, may be used to adjust the plan and, if necessary, make special repayments.

Time of payments

To really ensure long-term liquidity, it is not enough to compare revenue and expenditure. Also important is the time when a payment is due. So it is rather unfavorable, if the holiday money arrives in June, but the insurance wants to be paid in May. Only those who keep track of this and who make up reserves in order to be able to service pending payments, remain permanently liquid.

example calculation

example calculation

In the following example, Tim is working full-time, his wife Else has a 450-euro mini-job. They receive monthly child benefit for a child, Tim receives additional holiday and Christmas bonus. In addition, they rent an apartment, which generates additional monthly income.

In addition to the cost of living, the two maintain a vehicle, Else is active in a club, the child attends a kindergarten. In their spare time, the spouses like to go to the cinema or have dinner in the evening. The car insurance is 500 euros annually, civil liability and household 120 euros. For car repairs, Tim plans half a year from the experience 500 euros. Tim’s credit card costs 30 euros annually, Else uses a monthly ticket of public transport.

The couple needs a loan for the purchase of a mobile home, with which the three would like to go on holiday in the future. The loan amount is 40,000 euros.

  Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 12
Wages Tim 2400 2400 2400 2400 2400 2400 2400
Minijob Else 450 450 450 450 450 450 450
child benefit 194 194 194 194 194 194 194
holiday pay           800 800
Rental income 410 410 410 410 410 410 410
Total revenue 3454 3454 3454 3454 3454 4254 4254
rental fee 750 750 750 750 750 750 750
additional costs 200 200 200 200 200 200 200
foods 400 400 400 400 400 400 400
Insurance 100 100 600 100 100 220 100
Road tax   250          
repairs           500 500
membership fee 15 15 15 15 15 15 15
kindergarten 80 80 80 80 80 80 80
leisure 200 200 200 200 200 200 200
clothing 200 200 200 200 200 200 200
fuel costs 80 80 80 80 80 80 80
public transport 80 80 80 80 80 80 80
electricity 50 50 50 50 50 50 50
Telephone / mobile 50 50 50 50 50 50 50
GEZ 18 18 18 18 18 18 18
Account / Credit Card 15 15 15 15 15 15 45
Total expenses 2238 2488 2738 2238 2238 2858 2768
monthly surplus 1216 966 716 1216 1216 1396 1486
Credit rate incl. Annual percentage rate of 2% 870 870 870 870 870 870 870
cumulated 346 442 288 634 980 1506 7022

(In the illustration, the months 7-11 are hidden, but taken into account in the formation of reserves, assuming that the same data apply here as for month 5)

The calculation shows a monthly surplus of 700 to 1,500 euros, ie, the monthly expenditure fluctuate and accordingly the credit rates should be planned.

After detailed research Else and Tim opt for an online loan with a term of 48 months with an annual percentage rate of 2%. This results in a monthly credit of 870 euros including the effective annual interest. Less the monthly surplus, this results in a monthly residual value that can be accumulated. As a result, it can be seen that the family can accumulate 7,000 euros in reserves per year.

For the calculation of own expenses always an individual adaptation is necessary. It is helpful to take the account movements as the basis for monthly in- and expenses. Above all, self-employed and freelancers, founders of spe or ALG recipients who are looking for a job in the near future, are exposed to many planning uncertainties. Here it is worthwhile to update the plan again and again and adapt it to the conditions.

Determination of the credit rate

Determination of the credit rate

The amount of the credit installment is not based solely on the repayment installment. The annual percentage rate of charge and, if applicable, any additional fees must also be taken into account in the determination. Here is worth a comparison, since the interest rate may vary – which at a loan amount of 40,000 euros and a term of four years at 1% almost 1,000 euros. Another positive aspect is the possibility of free special repayments if the financial situation changes positively over the term of the loan.

Liquidity tables allow you to easily test different levels of credit after entering the fixed and variable costs and revenues. It is important that at the end there is never a negative number in the row of accumulated reserves.


Liquidity planning seems to involve considerable effort. In the end, however, it pays off to take the trouble and to have the certainty that the loan leaves enough financial leeway to ensure that sufficient money is available even in the event of unexpected events.


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