Methods To Prepare Your Own Personal Financial Statement
When you decide to understand your current financial status and want to analyze and do it on your own, make a statement and keep this framework for your entire future. This can be helpful to understand your profits and losses and also to make better future plans.
This becomes crucial when you are in the plan to start your own business soon. So the decision to create your income statement is clear to define your business route. Let us take a quick look at the easy steps to do one.
- Choose and decide your format: this is the first step to make a comfortable format that you can easily understand and work with. The easiest one is a spreadsheet like excel which can give you all formula and calculations made better. There is no need to worry if you are not computer oriented, a good notebook and pen will do to make a handwritten version. You could also look at options like taking a software to make the financial statement.
- Create a balance sheet: if you are a non-accounts person, learn the basics of a balance This will contain the complete details of your assets and liabilities in a systematic format. It is a two column one, with assets on the left and liabilities on the right. list out the actuals from your record of finance and when you subtract your liabilities from assets you can obtain your network.
- Create an income statement: another format which gives you the details of the revenues and expenditures that you have come across so long. This will contain all the details relating to your finances as salary received, bonus received, rent paid, utility bills paid etc. so when you get the difference between the revenue and expenditure you get your net income from this. A quick and simple process.
- Update this statement regularly: once you have created the statement as per your convenience, make it a habit to keep updating what will you do afterward with income and expenses. Thus, you can look at it at the time of need and save it for a long time.
- Include descriptions: at places where necessary, you can add some descriptions along with just numerical to show the exact reasons for the income or expense or any description which you need to keep in mind.
- Take advice from a financial expert: when you are done with all the above, have a meeting with a financial advisor to just understand that you are on the right.