Blueroselady's Weblog

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How to make personal income statement?

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One of the most useful courses that I had in my undergraduate study was accounting.
We learned how to make income statement for companies.
However, the same principle can be applied to make our own personal income statement.
Only when one is able to manage personal finance well, one is capable of managing the finance of companies.

PERSONAL INCOME STATEMENT
You can use spreadsheets (e.g. excel) to keep track on your income and expenses.

Total savings = total income – total expenses

Types of income:
active
passive

Types of expenses:
personal
children
housing
transport

In more details …

ACTIVE INCOME
net salary.
401K / CPF: I do not include this since it will be many years later when I can withdraw.
commissions.
bonuses.
directors fees.

PASSIVE INCOME
dividends.
royalties.
interest income.
private business profits.
net rental income.

PERSONAL EXPENSES
dining out.
clothes: except for underwear, I do not mind wearing 2nd hand ones from my mother / sister.
entertainment.
communication (mobile phone, Skype, data plan).
insurance (life, hospitalization).
personal taxes.
gifts, donations.

CHILDREN EXPENSES
health : vaccination, medicine.
education (school, text books, tuition / enrichment classes): swimming, music if the children show keen interest.
school bus.
clothes: get all new underwears and few new ones for special occassions, get 2nd hand for most clothes because children grow fast.
toys: we strive to minimize this, instead bring children to beaches, parks and libraries. I had little toys so that I socialized a lot (other kids seem to have a lot of toys) and when my parents moved to non-residential area, I used my imagination to play.
allowance: we strive to minimize this by packing their lunch. I had no allowance until I finished my primary school education.

HOUSING EXPENSES
mortgage.
utilities (water, electricity, service and conservancy, internet connection).
cleaning (e.g. full-time maid, part-time maid): get your children and spouse to do duty roster.
groceries.
property tax.
fire insurance.
mortgage insurance.

TRANSPORT EXPENSES
public transport (trains, buses, air tickets): buy air tickets in advance for peak period.
car installment.
petrol.
maintenance / servicing.
car insurance.
road tax.
season parking.

See also how I strive to minimize my expense through frugal lifestyle.

Ideally: earn -> save -> invest -> spend
Vision (December 2013) : earner -> saver -> investor -> philanthropist

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Written by blueroselady

September 17, 2012 at 8:56 am

One Response

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  1. […] To calculate expenses, see a previous post on how to make personal income statement. […]


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