How to Use Your Income Statement to Plan Your Budget
- projectdoneangie
- Dec 18, 2011
- 2 min read
My last blog was about reading an income statement. You can use this information to plan a budget and do some goal setting.
Take a few minutes to write out your monthly income and expenses as you think they are today. Do these numbers match your income statement? If so, great job! You are probably living within your means and have a firm understanding of saving and making your money work for you. If not, let’s take a look at your monthly numbers and see if we can find some areas to do better.
If your goal is to start a savings account, review you’re real spending habits. Comparing this information to what you have written out might make it obvious where you could be saving money.
If your goal is to find out if your car is a money pit or a good value, review your fuel expenses and any maintenance to your written numbers. If your fuel costs have been more than you thought, finding ways to cut back on driving might help. If your maintenance expenses are high, you might be able to save by finding a new mechanic that also keeps an eye out for future maintenance that will be needed so that you can plan ahead. Surprisingly, not all mechanics are great about verbalizing routine maintenance that could be done now to save you lots of money later.
If your goal is to start a business, review your numbers to get a grip on what your real monthly expenses are at this time. Your business won’t thrive if you are constantly stressed about making your mortgage payment. This information can help you set realistic pricing for your goods or services.
These are just a few of the ways that your income statement can help with budget planning. The overall advantage is knowing what your lifestyle is really costing you financially. There are so many strategies that you can use to save money. Anything saved can be used as Capital later to invest in your future. Writing out what you think your expenses should be each month and then comparing them to what they actually are per your Income statement, will allow you to set realistic goals.
Subscribe to my blog to see next weeks tip regarding the Income Statement and how you can be rid of the confusion and finally use it to your advantage!
Now it’s your turn to respond! What questions do you have about the Income Statement? Or maybe you have another financial question! Leave it in a comment below, or join me on my Facebook Page at: http://facebook.com/ProjectDone I would love to answer any question you have!
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