A personal statement is a document detailing the income, expenditure and profit or loss that a person has obtained a period of time.
Having a personal income statement allows a person to understand and analyze the income, expenditure and profit or loss (difference between revenue and expenditure) has been obtained for a period of time, and based on this financial analysis, to make decisions (for example, to reduce costs in a given game) or financial planning.
Also, a personal income statement allows a person to compare the results obtained in a period with the results obtained in previous periods, and thus, for example, whether it is meeting its financial goals.
To better understand the concept and the usefulness of a personal income statement, see below how to develop and take advantage of one in 3 steps:
1. Income Detail
We must first make a list of all revenue that we earned over a period of time (for example, for a month, six months a year, etc.) Regardless of when they become effective charges, For example, if we sold any assets, we record the sale, even though half of it just going to collect the following month.
Between income include: wages, business, investment, etc.
2. Itemize expenses
Having detailed our income, we will detail all the expenses we made during the same period equally, regardless of when they are made the payments, for example, if we bought an asset, we record the purchase even though half of it’s just going to pay the next month.
Among the expenses may include: food, education, health, transportation, clothing, recreation, services, interest, etc..
3. Develop personal statement
Once we have the necessary information, we move to develop our personal income statement (preferably in an Excel spreadsheet).
Gross profit is for the sum of the income, while net income is the difference between revenues and expenses, no profit when revenues are greater than expenses, and no loss when expenses exceed income.
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Tags: financial analysis, financial goals, personal income statement
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