Income & Expenditure Statement – Format & Example
Let's get practical. How do you actually prepare this statement? It's simple arithmetic, but it reveals powerful truths about your lifestyle.
The Components
1. Income (Inflows)
- Gross Income: Total earnings before tax.
- Net Income (Take-home): This is what matters. Salary credited to bank after TDS/PF.
- Include: Salary, Bonus, Interest, Rent received, Gifts.
2. Expenses (Outflows)
- Fixed Expenses: Rent, EMI, Insurance premium, School fees. (Hard to cut).
- Variable Expenses: Food, Entertainment, Electricity, Travel. (Easier to cut).
3. Surplus / Deficit
Surplus = Total Income - Total Expenses.- If positive, you are saving. If negative, you are digging a debt hole.
Format of Personal Income & Expenditure Statement
For the Month/Year ended [Date]
| Particulars | Amount (₹) | Amount (₹) |
|---|---|---|
| A. INCOME (CASH INFLOWS) | ||
| Salary (Net take-home) | 50,000 | |
| Interest on Savings/FD | 2,000 | |
| Dividend Income | 500 | |
| Rental Income | 10,000 | |
| Total Income (A) | 62,500 | |
| B. EXPENSES (CASH OUTFLOWS) | ||
| 1. Fixed Expenses | ||
| House Rent / EMI | 15,000 | |
| Car EMI | 8,000 | |
| Insurance Premium | 2,000 | |
| 2. Variable Expenses | ||
| Groceries & Household | 8,000 | |
| Electricity & Water | 1,500 | |
| Fuel / Transport | 3,000 | |
| Mobile & Internet | 1,000 | |
| Dining Out / Entertainment | 4,000 | |
| Miscellaneous | 2,000 | |
| Total Expenses (B) | 44,500 | |
| C. SURPLUS / (DEFICIT) (A - B) | 18,000 |
Analysis of the Example
- Savings Rate: (18,000 / 62,500) × 100 = 28.8%. (Healthy is > 20%).
- Fixed Expense Ratio: (25,000 / 62,500) = 40%. (Keep below 50% for safety).
Common Mistakes
- Forgetting Annual Expenses: Car insurance comes once a year. If you don't divide it by 12 and add to monthly view, your statement is inaccurate.
- Counting Credit Card Swails as Income: Credit limits are Debt, not Income!
- Ignoring Cash Spends: Small cash transactions add up (The "Latte Factor").
Summary
- Start with Net Income (Cash in hand).
- Categorize expenses into Fixed and Variable.
- The bottom line (Surplus) is the money available for investment.
- A negative bottom line means you are living on borrowed money.
Quiz Time! 🎯
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