Personal Cash Flow Statement Assignment How does a personal cash flow statement help you organize your finances? A personal cash flow statement gives you the ability to separate your finances in diverse groups so you can receive a idea of where certain parts of your income is going, I enjoy the ability to see details about my finances. Like when you go shopping the cashier gives a receipt, this allows you to see how many items you purchased.
Spending plays a large part in your cash flow statement as well; if we do not calculate what we spend all of our calculations left in our bank account would be inaccurate. To see how much money I am spending in a certain time frame, allows me to create new restrictions for myself. Therefore, I can budget efficiently, without this ability I would not learn anything from my financial mistakes. When the holidays come many individuals take the money they have saved through the year, so they can get the appropriate gifts for their love ones or even their selves.
Teaching yourself how to have self control can benefit you. The ability to save does not only allow you to purchase nice gifts, but also helps save you plenty of money in the end. We learn from experiences, so is it any different when it comes to our “money”? A cash flow statement should not be completed every year, but when income is received. You need to be able separate expenses, so you can see what you have left over to save. You should never wait for the last minute to save, a cash flow sheet is not to discourage you, but encourage you of being wise when spending.
What was the most interesting thing you learned about completing this worksheet? When completing this sheet I was a little worried about the guilt I would feel about my spending habits. This sheet was a useful tool because it allowed me to open my eyes about where my money is going and where it should be going. I want to be able to add more money to my savings as much as possible throughout the year. The sheet is teaching me how to be informed about my expenses as well as what percentage of my money is in the entertainment category versus the personal care section.
What was interesting was how much of my money was going to bills; I use to hear my grandma say all her money went to her bills. I wonder if she used the cash flow sheet would she feel differently. I believe that is my many individual enjoy the ability to write down their bank information in their checkbook, this helps them receive a visual of what is going on. Imagine trying to play sport with a blind fold, it would be almost impossible, that is how I feel when I am unable to see my transactions from my bank account.
The cash flow sheet has introduced a new way of seeing my finances, it also just does not tell you how much your spending but who much goes to investments, savings, or retirement. I always felt I spent more money than I was saving, the cash flow sheet proved that I was correct. That is one issue I will continually work on until it is better. This also gives me a idea of my gross income, I always thought you think about your gross income when you are doing your taxes but I was wrong.
You should not wait until income tax season to think about your gross income. Did this worksheet provide you with any ideas about how you may want to change your budget (how much you are spending, saving, or reducing your debt)? The cash flow sheet shows I need improvement on my spending habits as well has saving more money for emergencies. These issues will become a work in progress issue for me. I do plan on adding 25% of my income to my savings account.