Personal Finance Inventory

Companies conduct year-end inventory count, year-end closing of financial books, analysis of cash flow or sales analysis if they hit sales vs forecast. As for me, one of my annual year-end activities is to do a “Personal Finance Inventory.” This simply my own analysis of where all my money goes or my personal cash flow. Knowing this gives me an idea if I was able to stick on my budget, if I overspent and if I did, what do I spent the most? Is it worth it? If not, then I can plan, change my spending & saving habits and do better & wiser the next year.

If you wish to do the same, then this are simple steps to begin with:

  1. List down your gross income from your day job if you’re employed, if you’re a businessman, list all your profit or Return on Investment (ROI), extra income from business, sidelines (if any), then add all your income for the year. Now you got your TOTAL ANNUAL GROSS INCOME.
  2. Deduct your total annual withholding tax, you can get this data from your payslip. You have now your TOTAL ANNUAL NET INCOME.budget-clip-art3
  3. Add all payroll deductions such as Pag-ibig, Philhealth and SSS, these are government mandatory benefits and you can consider this as insurance or investment. Compute total government insurance.
  4. List all you expenses, such as housing, utilities, loans payment, food, transportation, clothing, medicines, recreation, charity, and other miscellaneous expense. Compute for TOTAL EXPENSES.
  5. List all your savings & investments such as emergency fund, insurance, stock market, mutual funds, UITF, etc. Compute for TOTAL SAVINGS & INVESTMENTS.
  6. Now, add your total expenses + total savings/investments and compare this with your net income. There should be minimum variance between these two amount. Else, you was not able to account where this variance amount goes.
  7. You can also compare your actual expenses and savings/investments to your budget. (actual/budget) you get how much you spend more or less vs your budget. For example, your actual savings budget for the year is 100,000 but you was able to save 125,000, you’ll get 125% this means you surpass your savings goal by 25% more!
  8. If you don’t have a budget, this computation can be your basis to start budgeting. But of course, you can always adjust depending on your priorities. You can start to spend less and save more.

Hope this help you to plan your finances this year. Planning is one thing, but commitment to stick on your plans is another. Spend wisely and honor God with our finances and He will bless the work of our hands!Honor the Lord with your wealth, with the firstfruits of all your crops; then your barns will be filled to overflowing,and your vats will brim over with new wine. Proverbs 3:9-10.

Remember that the Lord is our only source, He is the owner and controller of everything on earth. The earth is the Lord’s, and everything in it, the world, and all who live in it;” Psalm 24:1. 

Need help in your budgeting? You can use this free e-book Dave Ramsey’s Guide to Budgeting. How about an app to track your expenses on daily basis, install Wally Finance App for free in your smartphones.

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One thought on “Personal Finance Inventory

  1. Pingback: How I Fund My Wanderlust? | My Journey, His Glory...

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