Personal Financial Statements, Budgeting, Cash Flow
PErsonal Financial Statements
Personal Financial Statements show a person's assets, liabilities and net worth and are essential to the financial planning process. Without these statements, it is difficult to help an individual to achieve his or her financial goals and objectives.
Budgeting involves estimating income and expenses for a given period of time to allow for development of a financial plan that will allow one to attain financial objectives. A budget allows one to control household expenses and measure progress toward achievement of specific goals, such as retirement, funding a college education or buying a vacation home. A budget is a means of financial self-evaluation.
A statement of cash flow shows a person's cash receipts (income) and cash disbursements (expenses) for a given period of time. It's a strong indicator of whether an individual's spending exceeds his or her income, or where personal spending might be trimmed to increase savings and investment.