How to make a personal finance statement

When the year comes to an end, the norm is companies get into the mode of preparing to close their books and prepare financial statements for the year. Financial statements give a summary of the financial performance of the company. The company is required to report to its stakeholders and shareholders on how well it performed. As an individual it is also important that you sit down and prepare your own financial statement (Income and expenditure and balance sheet) for the year. Well since you are not a profit-making entity you need to establish whether you have a surplus or a deficit. Your financial statement should have the following categories Income: Salary XXX Interest earned XXX Investment income XXX Donations received XXX Loans XXX Total income. XXX Less expenses: Airtime and data XXX Bank charges XXX Bus fare XXX Clothing XXX Fuel XXX Groceries XXX Interest on loan XXX Loan repayment XXX Rent / mortgage XXX Rates and water XXX Electricity XXX Gas XXX Offerings XXX Repairs & maintenance XXX School fees XXX Tithes XXX Total expenses XXX Surplus / (deficit) XXX NB The list of income and expenses is not exhaustive so you should classify them according to your own setup. If you have assets (that is something that brings money into your pocket) you need to record them in your balance sheet. On the other hand, if you have outstanding obligations you need to record them under liabilities (something that takes money out of your pocket). The difference between your assets and your liabilities is your net worth. The reason for drawing up a personal financial statement is to determine how well you performed financially during the year. Did you add value to yourself or you destroyed it by your financial decisions. Your financial statement should tell you how well you responded to the economic situation that prevailed in the year under review. It should also tell you how you responded to the social factors in your sphere of influence. Another critical thing that financial statements reveal is how well you planned for the year and how you executed your plan. After producing your financial statement, you need to decide on the financial strategy for the year ahead in order to have different or better financial results. The reason most people fail to improve their financial position is because they don't know where their money came from and where the money went to. This stems from their failure to consistently keep a record of their financial transactions. #financialintelligence#financialapostle