A Personal cashflow statement, also known as a personal income and expenditure statement, is a summary of cash receipts and payments for a given period, such as a month or a year. This report provides data on income and spending patterns, which is handy when preparing a budget.
The first component of a cashflow statement is the cash received during the time period involved. For most people, the main source of income is money received from job. Other common income sources include wages, salaries, commissions, Self-employment business income etc
Cash payments for living expenses and other items make up the second component of cash flow statement. The use of a cheque book or some other recordkeeping system is necessary for an accurate total of cash expenditures.
The difference between income and expenditures can be a positive (surplus) or a negative (deficit) cash flow. A deficit exists if more cash goes out than comes in during a given month. When you have a cash surplus, this amount is available for saving, investing, or paying off debts.
A Cashflow statement therefore provides the foundation for preparing and implementing a spending, saving, and investment plan.
Changes in net worth are the result of the relationship between income and expenditures.
Since you have your two personal financial statements, you can now analyze your Financial Health.
1. Financial Planning Worksheet: Download, print and use. (pdf file)
2. Personal Cashflow Statement Worksheet: Use this worksheet to prepare a personal/household cashflow statement. (zip file)
When you are through, proceed to determining what's important to you and setting up your financial goals.