How to Make your Own Income Statement

Making your own income statement is very important, it is a business called "life" if you don't know how to monitor, you'll be in trouble and there is a tendency you  would file a bankruptcy. Whether I like it or not, monitoring your income statement is big plus so you know if you're making a profit or loss in your life. Remember income statement  is  your  actual  cash inflows and cash outflows.

Income statement Formula:

Monthly income (after taxes) - monthly expenses = Profit

Personal Monthly Income Statement:

At the End of January, XXXX

Income:

      Salary/Wages :xxxx

      Other Income :xxxx

Total Income Available for living Expenses:                        xxxx

Expenses:

     House Mortgage      xxxx

     Car Payment            xxxx

     Food                        xxxx

     Gas                          xxxx

     Clothing/shopping   xxxx

     Utilities                    xxxx

     Cable                       xxxx

     Telephone                xxxx

     Insurance                 xxxx

     Others                      xxxx 

Total Expenses                                                                      xxxx

Net Income/ Loss income                                                   xxxx

Your net income is simply the result of subtracting your total income from your total expenses. A positive  net income would tells that you earned more than you spent and you have some money leftover from that month.However, Loss/ negative income tells you spend more money  than you brought in.

Related Posts:

• Why is Basic Accounting so Important
• How to make or create your own Personal Balance sheet

   

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How to Make Your Own Personal Balance Sheet

There are simple ways to make or create your own Personal Balance sheet even if you're not an accountant. If you just want to monitor  your Balance sheet,it is a smart idea so you know how much you own and how much you owe. Basically all you need is to write down all your assets and liabilities. It is important you know all of them and have some receipt and proof for proper documentation.                                                         

To get your net worth you have only to subtract your total assets from your total liabilities. Remember your net worth go up as your assets increases and your liabilities decreases and this would be a good sign you are in a good hands. Once your net worth go down- it means your assets decreases and your liabilities increases and your personal finance is in danger.

Monitoring your personal finances is very important nowadays. The most important we can do, spend what you can afford and try to save during rainy days if possible.

                                                                Personal Balance Sheet

As  of January 1,XXXX

Assets:                                                                                    

Cash on hand:   XXX

Savings account: XXX

Checking Account: XXX

Prepaid Deposit: XXX

Cars: XXX

Home: XXX

Retirement: XXX

Investments: XXX

Other: XXX

Total Assets                                 XXX

Liabilities:

Home Mortgage: XXX

Car Payment: XXX

Credit Card

Other Debt: XXX

Total Liabilities                           XXX

Net Worth:                                   XXX 


Related Posts:

• Why is Basic Accounting so Important

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Why is Basic Accounting so Important for Personal finance

I graduated in Business school and I know Basic Accounting so important in our daily life. We just don't know but we use accounting everyday- the money comes in and money that  goes out. Basically you don't need to graduate in Business school to understand all of the accounting cycle. Of course it is well worth once you are there and have a better understanding about the subject. It's all different stories once you study the accounting or wants to be an accountant.

There are only 3 words you should understand and how  to manage your finances. Most of us screw up with these words.

• Asset-  is an economic resources or  whatever you own like a private property, one of the standard examples are cash, furnitures, homes, clothes,car and land. Remember all these assets my depreciate the value if you think a long term.
• Liability-is responsible for something. This is your debt and you have responsibility to pay in a short term or long term. One of the example is your house mortgage, car mortgage and your credit card. 
• Income-is your monthly wages or salary. 

Most people screw up with these 3 words and sometime they think liability is there asset and they forget about their income and that's we called a compulsive buyer. Some people forget that asset would depreciate and never think the long term. 

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