Your Income Statement

I believe that after reading and implementing my suggestions, you will gain full control over your finances, expenses and you will be ready to multiply your savings plan or to execute a debt reduction. If you want to control your finances, I sure you’ve come to the right place.

You need to start with somewhat „painful exercise”. After this exercise you will know state of your finances.  Simply you will answer the question “Am I “below the line” or “above the line”?

Financial statement is nothing more than the balance sheet of your revenues and expenses. As far as revenue is concerned it is fairly easy to identify; costs are more difficult to “capture”. Do not worry about it, just try to identify as many of them as you can.

Well prepared financial statement will be the starting point to develop a plan to reduce costs. Additionally you’ll need to answer the following questions:

  • How much do you really earn and how much do you really spend globally (I mean in a whole year)?
  • What are your monthly fixed costs?
  • What are your irregular costs? (on average)
  • How much could you save or invest every month? (this is very important)
  • How much money escapes you in unspecified ways?

I have also attached excel spreadsheet below, which will help you to easily prepare your financial statement.


Calculate: Your income statement


Let’s start with simple part – and by this I mean revenue. Fill only yellow fields, other fields will fill automatically. You will separately fill your regular monthly income and irregular income.

  • Your salary – monthly deposits to your account – in the worksheet, enter the amount of net salary, or as much as you really get into your account. These are the main funds you actually control.• Additional earnings “after hours”, eg. remuneration from contracts, agreements, etc.• The interest rate on bank deposits, bonuses from banks, eg. received while paying with credit cards,  cashback for transactions on the Internet, etc.
  • income from real estate rental
  • income from advertising, eg, if you are running a blog or other internet service

Separately you can note the revenue you receive irregularly. In this case, type in the yellow fields aggregate amount you receive from the particular source every year. These may be for example:

• Periodically paid bonuses
• Reimbursement of overpaid taxes
• Other e.g. like garage sale

The spreadsheet will total amounts of revenues and also it will calculate your average monthly earnings after taking into account your irregular income.


My recommendation for you is this: do not start by categorizing the costs. Just type them into the excel spreadsheet in any order in which they occur or you remember them. First, make the list of costs by naming all cost items. Then fill in amounts as accurately as you can. If this list is complete, now you can break it into separate categories. Categories which you should consider in your statement are:

  • rent, media, water, waste disposal, food, TV / Internet / phone, loan installments, car expenses, and/or other transportation expenses like monthly bus pass, etc.

After entering the monthly costs (remember to fill only yellow fields) Excel will automatically calculate the annual amounts of the these costs.

In case of irregular expenses, you should enter the yearly costs. Here you should include among others:

insurance costs – once or twice per year like home or car insurance , car repairs, clothes, holidays, gifts, party’s like birthday or anniversaries, etc

Excel will automatically total all these for you. For example, if you are planning a vacation to spend $2000, then in principle you should increase your monthly costs by about 1/12 of this amount, or $166. As you can see irregular costs can have a significant impact on your average monthly costs.

Your income minus your costs

Once you know your income and expenses, then you have all the data needed to calculate the amount you can save. If the aggregate revenues are lower than costs, it means that every year you spend more than you earn. If the situation is reverse the spreadsheet will calculate how much you can save in a year and how much savings you could accumulate on average per month.

The last parameter in the spreadsheet is the coefficient showing what percentage of your monthly income you can save. Many experts say that if this ratio is more than 10%, it means that you are in a good financial condition and you have the potential to create a solid financial base.

Cost reduction

If your costs are higher than revenues you can see that it’s time to take a better care of your finances. I will elaborate on the subject in my blog. But you do not have to wait – I encourage you looked for sources of savings right away.

If you got any questions or ideas please don’t hesitate to put them in comments. I will happy to answer any of your questions.

In the next article I will write about assets/liabilities assessment (Your Net Value – Apprise Yourself), to complete the calculation of your financial situation. Stay tuned 🙂

Read also:

Home budget – step by step

Your Net Value – apprise yourself

Categorization of your expenses

What to start recording your expenses?

Please send link to this article to all your friends in order to promote the idea of into saving money habit.

If you want to help me promote this blog please recommend it to your friends and like it on Facebook, Instagram and other social media.

Cheers and see you with a next article,

your Kinga

2 thoughts on “Your Income Statement”

  1. I’ve been browsing online more than 4 hours today, yet I never found any interesting article like yours.

    It’s pretty worth enough for me. In my opinion, if all
    site owners and bloggers made good content as you did,
    the net wjll be much more useful than ever before.

  2. Thank you very much 🙂 I am trying to make high quality content, but it is always question of personal opinion of the reader. I am glad that you like it.

Leave a Reply

Your email address will not be published.