The income statement is a document or a measuring tool that measures the profit and loss in a business and compares incoming funds with the expanses you use for a specific period of time. A number of people are using personal income statements in order to bring and maintain their monthly or yearly financial records while lots of others have believe that it is a difficult and time consuming process. In fact, personal income statements to help you track your expense and to bring a balance in your financial activities and one can easily prepare it just within five to ten minutes. People have different reasons for making personal financial statements however the benefits of each financial statement are almost same.
Guidelines to prepare the Personal Income Statement
Personal financial or income statements are showing your current financial health and status. For preparing a personal income statement, you need to write the details of all the funds that will be coming to you and the expanses that you have made or sent out.
- Open a spreadsheet in Microsoft Excel and list all your incoming funds including wages or salaries after taxes, tips, royalties, rents and commissions. Divide all the sources of income into subsections. This will help you in understanding the overall income comes from different sources. Sum the total amount of income coming from different sources.
- Then create sections for donations and savings because these are usually fixed and confirmed kind of expenditures that a person made every month.
- Subtract the amount of savings and donations from the sum of income.
- Create another category with the main heading of expenditure for living expenses with subsections including food, utilities, rent, clothing, grocery, transportation or fuel, debt payments, medical, insurance and miscellaneous. In the section of miscellaneous write all the expanses that are not regular like gifts, parties or any other unexpected expense.
- Sum all these expanses and subtract them from the total of income after savings and donations.
- List all other expanses like disaster expanses, job expanses, capital loss and theft etc.
- Finally, reconcile all the information to ensure that everything is accounted correctly in correct place and is calculated accurately. Your personal income statement is ready. Take a print out of your personal income statement or save it on your computer for further use or comparison.
The personal income statement has a number of benefits and therefore everyone should adopt this habit. It is good to prepare personal income statement on a monthly basis in order to track all the expense as well as you can prepare an annual income statement with the help of them. Your personal income statement will help you in understanding the market values of different household accessories as well as will tell you that most of the fixed expanses have a variable value that affect your overall income and expenses. Preparing an income statement cost you nothing and you can easily create and maintain it on weekends.
Personal Financial Statement Template