Learn how you can use your knowledge of what you earn on an annual basis to achieve more…
It is important that you know your income that you earn along with your expenses that you pay out on an annual basis.
In this discussion TheWealthIncreaser.com will discuss the importance of looking at your income over a period of time so that you can more effectively pursue and reach your future goals.
In the last article TheWealthIncreaser.com discussed the importance of creating a budget or cash flow statement in concrete terms so that you could achieve more throughout your lifetime.
This discussion will build on that theme as it is important that you have a real grasp on how you can use personal finance statements to achieve more throughout your lifetime.
Although creating a “personal income statement” for the first time can be difficult and challenging for some, the benefits and time spent will be well worth it if you are now sincere in your desire (efforts) to achieve real success and build wealth in a manner that allows you to give it your best.
If you have a yearning to reach higher and achieve more–you can do so with a high level of determination and the inclination to look at your yearly inflow and outflow of cash into your household and use the results of that analysis to plan for a more rewarding future as you build wealth.
By utilizing the following 3 steps you can start on a more definite path to building wealth in the current economy–or any economy!
1) Complete a self-analysis of where you now are financially on an annual basis
It is important that you know what amount of income comes into your household and goes out of your household on an annual basis or a set time or interval as that knowledge is invaluable when you are in the process of building wealth.
Does your annual income exceed your annual expenses or is there a shortfall?
You can think of your personal income statement in the same manner as your personal cash flow statement but realize that instead of monthly, it is over an interval of time such as 6 months or more commonly 12 months.
The following personal income statement provides you a blueprint of what you need to enter to come up with your income and expenses over a 12 month interval to help you better determine financial moves that you can possibly make in your future that can lead to more success for you and your family.
How to Prepare a Personal Income Statement in Simple Form:
Yearly Receipts (2021)
Wages $_________
Dividends $_________
Interest $_________
Rental $_________
Royalty $_________
Other $_________
TOTAL Yearly Receipts $_________
Yearly Expenditures
Auto loan payment $_________
Auto maintenance $_________
Child care $_________
Clothing $_________
Contributions $_________
Credit card payments $_________
Dues $_________
Entertainment $_________
Food $_________
Household maintenance $_________
Income & SS taxes $_________
Insurance $_________
Personal care $_________
Property taxes $_________
Rent payment $_________
Mortgage payment $_________
Retirement Investment $_________
Saving/investing $_________
Transportation $_________
Utilities $_________
Other $_________
TOTAL Yearly Expenditures $_________
Net Cash Flow
Total yearly receipts $___________
Total yearly expenditures – $___________
Annual Discretionary Net Cash Flow
$___________
The above income statement is rather simplistic, however if you enter accurate data it can be used as a template to transform your financial future and help you build wealth more efficiently.
It is important that you know what amount of income you earn annually and the amount of payments that you pay out on an annual basis and an income statement allows you to determine in a real sense where you can go financially in not only the coming years but also decades, if used properly.
If your income and expenses listed above are of a fixed amount (same dollar amount) monthly you can multiply by 12 to come up with your annual numbers. If you have variable expenses you may want to use estimates (be sure that the estimates are realistic) or average on a monthly basis.
If you have 12 consecutive months of cash flow statements available you may want to total them up and use them to construct your annual personal income statement on a fiscal rather than annual basis.
2) Determine where you want to go based on what your income statement allows you to do
By knowing the amount of income that you have available on an annual basis (or knowing if you have a shortfall) you can plan your future with more certainty.
You will know the amount of income that you have available so that you can formulate goals and objectives that can move you forward and make your existence on earth a more pleasurable one.
You will know if you need to get more income, reduce your expenses and/or put together debt payoff plan(s) so that you can truly reach your desired goals.
You no longer have to live your life in a manner where anxiety rules the day–as you now are aware of a more effective way–to keep financial problems at bay!
3) Determine that you will manage your finances in a comprehensive manner so that you can achieve more throughout your lifetime
Now that you have a handle on your annual income and expenses you can use what you now know to plan more appropriately for a more prosperous and rewarding future.
You can also expand your mind by learning new areas of your finances that you may not have addressed appropriately at this time or in your past.
By looking at your finances in a comprehensive manner at this time you position yourself and your family for a more rewarding financial future where success is even more likely to occur.
Conclusion
A personal income statement may be what is needed to give you the mental picture of what you can achieve in your financial future.
By seeing what you earn annually and what you pay out annually with more clarity–you can move forward confidently toward who you were meant to be.
You can think of your annual personal income statement as a budget or cash flow statement, however instead of a monthly time period it covers a 12 month or other designated time period. You can also more clearly visualize your “personal income statement” by looking at the net discretionary cash flow for the year as your household profit–or if you come up with a negative number(shortfall)–your household loss for the year!
You now know that success lives in you–use your practical knowledge of personal income statements and how you can enhance your mental qualities for the better–to really make your dreams come true!
Now is the time that you display your commitment to your future by mapping a path forward where you are “all in” and the wealth building that you desire is more likely to occur–due to your efforts to put yourself in position to win–again and again!
All the best as you achieve a new level of success…
NOTE: You or your in this discussion could mean you as well as other members of your household who contribute financially whether it be your spouse or other members of your household.
Return from Personal Income Statement & Wealth Building to Consistency & Personal Finance
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