(Last Updated On: 28 Dec, 2022)

When the year comes to an end, the norm is companies get into the mode of preparing to close their books and prepare financial statements for the year. Financial statements give a summary of the financial performance of the company. The company is required to report to its stakeholders and shareholders on how well it performed.
As an individual it is also important that you sit down and prepare your own financial statement (Income and expenditure and balance sheet) for the year. Well since you are not a profit making entity you need to establish whether you have a surplus or a deficit. Your financial statement should have the following categories

Income:Salary                                 XXX

Interest earned                XXX

Investment income         XXX

Donations received         XXX

Loans                                   XXX

Total income.                     XXX

Less expenses:

Airtime and data             XXX

Bank charges                   XXX

Bus fare                               XXX

Clothing                               XXX

Fuel                                       XXX

Groceries                           XXX

Interest on loan                 XXX

Loan repayment               XXX

Rent / mortgage               XXX

Rates and water               XXX

Electricity                           XXX

Gas                                      XXX

Offerings                             XXX

Repairs & maintenance XXX

School fees                        XXX

Tithes                                   XXX

Total expenses                   XXX

Surplus / (deficit)              XXX
NB The list of income and expenses is not exhaustive so you should classify them according to your own setup.

If you have assets (that is something that brings money into your pocket) you need to record them in your balance sheet. On the other hand if you have outstanding obligations you need to record them under liabilities (something that takes money out of your pocket). The difference between your assets and your liabilities is your net worth.

The reason for drawing up a personal financial statement is to determine how well you performed financially during the year. Did you add value to yourself or  you destroyed it by your financial decisions. Your financial statement should tell you how well you responded to the economic situation that prevailed in the year under review. It should also tell you how you responded to the social factors in your sphere of influence. Another critical thing that financial statements reveal is how well you planned for the year and how you executed your plan.

After producing your financial statement you need to decide on the financial strategy for the year ahead in order to have different or better financial results.

The reason most people fail to improve their financial position is because they don’t know where their money came from and where the money went to. This stems from their failure to consistently keep a record of their financial transactions.