Before we tell you how to create your personal income statement, let us first define the term income statement.
An income statement is a financial statement used to calculate the profitability of a company or entity for a specific period. Whether it be monthly, quarterly or annually.
A company’s profitability is calculated using the following equation:
Net Income = Income – Expenses
If a company’s expenses are greater than its income, the company reports they have made a net loss.
Net Loss = 10,000 – 20,000 = (10,000)
To create a personal income statement, you simply list your sources of income (salary, dividends, interest, other income) and your expenses (rent, utilities, food, gas) and deduct your total income from your total expenses.
The aim of every household should be to make a profit. The profits you make could be used to generate more income for your family.
We’ll be sharing this and more at our Family Finance Workshop Series: http://www.facebook.com/events/498763206827659/
See you there!