Example of a Personal Income Statement

A personal income statement can be an important budgeting tool if used properly.

A personal income statement helps you analyze expenses and revenues over a period of time or at a given point in time. It can be an effective budgeting tool if used properly.

Definition

An income statement is also known a statement of profit and loss or statement of earnings. It indicates revenues earned and expenses incurred over a period of time.

Significance

A statement of earnings is important because it helps you gauge the amount of disposable income, or net income, available to invest in retirement accounts, plan a vacation or save for college education.

Income

On a personal income statement, income represents salaries and bonuses you receive from a labor contract. If you own a small business, income reflects sales revenue.

Gains

A gain is income you earn from secondary activities. Examples include gains in financial market activities or on a sale of property. This also needs to be included.

Expenses

An expense is a cost of living, such as a bill, or a charge you incur from borrowing activities. Examples include rent, utilities and mortgage interest.

Losses

Losses are expenses you incur from secondary activities. Examples include losses in financial market activities or on a sale of property.

References

• U.S. Small Business Administration: Personal Financial Statement
• Brigham Young University: Develop a Personal Income Statement and Use It to Analyze Your Spending