The first step to starting your personal budget spreadsheet is to understanding how to setup your cash flow statement. You may have heard the word “cash flow” many times as it is a term used often in the finance niche. You may not know how much there is to understanding it though. Families learn A LOT from playing the rich dad poor dad game cash flow, they learn how to make money off of money and what unwise financial choices they are making.
What is a personal cash flow statement? It is a financial statement used to evaluate the relationship between one’s income and expenditures. Whereas the personal budget spreadsheet is like a snapshot of finances at a certain point in time, the personal cash flow statement shows inflows and outflows of cash over a period of time.
When should cash flows be recorded? The cash flow statement is prepared on a “cash basis”, which means that cash flows are recorded when they are received or paid. Some cash flows that you can identify other than the obvious wages, salaries, tips and commissions are scholarships, cash allowances or gifts from family, alimony or child support, investment earnings.
According to survey by bankrate.com, many households do not regularly track their household expenditures even though they know that they should. The most common excuse given was insufficient time.
Some terms you may see on personal budget spreadsheet or personal cash flow statements are fixed expenses and variable expenses. Fixed expenses are those that are constant dollar amount each period, such as rent, variable expenses would be like groceries, dining out.
If you spend money primarily by writing checks and using a debit card, it’s a little easier to track your cash outflows, since your bank statement and check register will be useful sources of information. Keeping a personal budget spreadsheet is like keeping a running routine everyday, this is why the wealthier stay wealthy just like how runners are always fit.
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