How to calculate personal monthly income statement ( know your profit or lost status)

How to calculate personal monthly income statement

Many people spend money from their job salaries, wages and side hustlers without knowing if the amount they're spending is actually less than or greater than what they're receiving as income a week or a month.

After I did a personal income statement for a friend, he was so happy that I saved him from some unnecessary spending and the income statement made him know exactly how to manage his monthly payments. Also read:How to create bank account in Credit union

Today I will show you the simplest way to calculate your personal monthly income statement that will help you determine what you are spending, I will Also share with you some importance of personal monthly income statements. Before we go to calculate, I will list some few importance of a personal monthly income statement.

Importance of personal monthly income statement

• It help reduce spending

• It shows you the amount you can save or invest

• It reflects if your salary and wages can sustain you monthly or not.

• It shows where you are spending the highest amount of money.

How to calculate a simple monthly personal income statement.

To calculate a simple mainly personal income statement, follow the steps below.

• Draw a table with a heading labeled Expenses on the left side and income on the right side.

• List all what you spend monthly on the expenses side and sum

• List all your sources of income and sum

• Minus Your total expenses from your Total income ( Income - Expenses)

• Get the total and compare, if it's negative, you are over spending, if it's positive, you are making a surplus.

Check sample  monthly income statement below

Expenses:

Electricity= 2000frs

Water= 2000frs

Tax = 2000frs

Rent = 30000frs

Transport= 10000frs

"Njangi" = 20000frs

Unforeseen = 14000frs

Total expenses= 80000frs

Income:

Job salary= 800000frs

Other incomes = 20000frs

Total income = 100000frs

Income -  Expenses 

100000frs -  80000fr = 20000frs

From the Income statement above, it shows this person is spending 80000frs a month out of 100000 frs he is receiving. 

The balance after his spending is 20000frs.

The means if he must save or invest, it should be less than 20000 frs.

This person is also spending too much since he is spending 80% of his Income.

Conclusion

Knowing your personal income statement can benefit you in many ways as listed above. 

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