- According to a survey conducted by Princeton Survey Research Associates International, only 40% of Americans use monthly budgets. Using a personal monthly income statement, however, is an excellent way to track your monthly and yearly expenses.Most income statements consist of the following categories: gross monthly income, rent, car payment, groceries, gas/transportation, bills (which include phone, utilities, credit card payments and student loans), groceries, entertainment, and a miscellaneous category.
- Money Matters 101 discusses how debt and worrying about a lack of income can lead to serious emotional, physical, and social problems in our lives. Extreme anxiety over money can lead to contention in relationships and also physical problems such as high blood pressure or depression. In order to remedy the tension about money, personal income statements are often suggested for those who are in debt. Tracking expenses and monthly income allows a person to see their flaws and which areas they could possibly trim in order to improve financial status. For example, once writing down your monthly bills and the incoming funds, you may notice that you are overspending in areas that could be significantly reduced. Personal income statements allow the individual to prioritize and cut back on unnecessary expenditures. Before having a statement physically in front of them, most people do not even realize there are unneeded funds here or there.
- Nowadays, people are being more cautious and concerned about their savings. In an unexpected loss of employment or any other emergencies, a good savings cushion could mean the difference between sinking and staying afloat. Using the personal income statement effectively can result in having increased monies to include in your savings plan. When you trim from one area, boosting your savings can give you a much-needed cushion. Does your savings only equal an emergency fund? Of course not. Savings can be for anything that your heart desires. In addition to emergency funds and retirement savings, why not create a stash for travel, gifts, and other social events such as weddings and graduations? Using your personal income statement to increase your savings is sure to please your pockets.
- Tracking cash flow on a personal income statement may encourage you to seek multiple (and increased) forms of income. Especially if you are not making enough money to pay for your monthly expenses, you may be motivated to ask for a raise or obtain a part-time job. Does having a personal income statement mean that you are guaranteed an increase in pay? Absolutely not. It simply means that you are cognizant of your financial situation and, after viewing a statement, you are more likely going to want to do something about it.
- It's great to use a personal income statement to view your financial flaws and eventually clean up your money problems. However, creating a personal income statement has one advantage that many people overlook. Keeping quality financial records is imperative. Not only will you be able to track your spending habits and cash flow, you can avoid any discrepancies with local and federal taxes. The IRS reports that in 2007, individuals and businesses that were audited increased significantly. Therefore, keeping accurate records all all spending habits can help you to file your taxes and also assist in defending your case if you are audited by the IRS.
