A personal financial statement is a way for individuals and small businesses to monitor their cash flow and how they are using their bank accounts and credit cards. These statements mimic the cash flow reports generated by larger businesses, so they are generally more detailed and accurate than simply keeping a check register or printing out your monthly bank statement. If you are serious about making a budget or getting your finances under control, use this personal finance statement template to figure out where your money is going.
Sources of Income
Begin your financial statement by listing all sources of income that bring in cash on a regular basis. For most individuals, the biggest source of income is their work salary. However, you may also receive regular income from investments, rental properties, interest on accounts and capital gains. Create a separate section for each source of funds under the general heading of “Income” so you can keep track of which sources of income are steady and reliable, and which vary from month to month.
Sort your recurring expenses into categories and group them under a general “Expense” heading. Some expenses should be the same from month to month, including rent, insurance expenses, school tuition, savings and debt payments. Other expenses tend to vary, but should still be recorded so you can keep track of how they change and whether any patterns develop over time. These include expenses such as utilities, gas, groceries and entertainment expenses.
It is also a good idea to include a designated section for assets already in your possession. This includes bank account balances, retirement accounts, rental properties and stocks. You may also want to list the value of some of your more valuable possessions such as your house or car, in order to create a more complete picture of the assets you can access.
Liabilities include loans and other areas in which you owe money. It’s often helpful to make a complete list of liabilities in order to keep track of how much you will eventually have to pay back. Common liabilities include mortgages, car loans, student loans and credit card debt. If you have any unpaid taxes, these should also go in this section of the finance report.
Personal Balance Sheet
A personal balance sheet is a great supplement for your financial statement to help you refine your spending. While a financial statement is used to track your spending in different categories of expenses, a personal balance sheet can be used to track each individual purchase or expenditure. If you are prone to forgetting exactly where you spent money every week, a balance sheet can be a great way to keep track of where your income is going.
Maintaining a Financial Statement
Keeping a financial statement up to date takes a bit of practice. You must be conscientious about maintaining your statement regularly so that you don’t end up with a balance that doesn’t align with what’s in your bank account. Consider using a designated software program to manage your expenses. There are many good software packages designed specifically for budgeting. You can even link them with your bank accounts to automate part of the work.
Putting Your Financial Statement to Use
How you use your financial statement depends on what you need out of your finances. If you are satisfied with the amount you spend each month, use the statement to make sure that things stay that way. On the other hand, if you need to cut costs, a financial statement can help you figure out where your money is going.
Seeing all your expenses and income in one place can more easily help you picture where you may be overspending and where you can save money. It’s an essential budgeting tool for any person or business wanting to save money and cut expenses.
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