Personal Cash Flow Statement

In the corporate world, a cash flow statement is a document which comprehensively, states the receipt and payment of cash. A corporate cash flow statement usually consists of what are known as a revenue-expenditure elements, indicating the inflow and outflow of cash. In such a business or corporate cash flow statement, the three principle elements: cash flow from operations, cash flow from investing activities and lastly, cash flow from financing activities are depicted. Problem is, you cannot follow the same format while making a personal statement. In such a context it is better to replace the first category with 'cash flow from personal income and expenditures' and the last category with 'cash flow from assets'. The following is an explanation as to how to prepare the statement and also, how to classify your expenditures and incomes in accordance with the said following categories.

It must be noted that you can prepare the cash flow for any given time period, which is also known as accounting period. It may be a day, week, month or even longer periods such as quarter (three months), 6 months and an entire year.

Elements of a Cash Flow Statement

The elements of a cash flow statement are always divided into three categories. Each category depicts inflow and outflow of cash:

• Cash Flow from Personal Incomes and Expenditures: This category consists of all the cash flows from incomes (inflow) such as salaries and other incomes with regards to one's trade or profession. Expenditures (outflow) such as household expenditures would be included in this category.
• Cash Flow from Investing: This category shall have two sub categories as the cash (inflow) which is received as returns on investment and secondly, cash which is spent or rather invested (outflow) into appropriate channels.
• Cash Flow from Assets: Often, some of the assets that you own tend to generate a certain revenue and in some cases, you also need to spend on these assets. The two sub categories thus, would be the expenditure (outflow) occurring as a result of these assets, and secondly, the income (inflow) being generated from these properties.

The fundamental principle is that to get the total personal inflow of cash, you will have to subtract the outflow of cash from the inflow of cash from each category and then total up the figures of the main categories.

Format for Personal Cash Flow Statement

The following is a small format of the cash flow statement which you can prepare for your personal financial affairs. Some common examples of incomes and expenditures which you can use in the categories and subcategories have also been included in the paragraphs that follows.

Function	Particulars	Amount
1.	Cash Flow from Personal Incomes and Salaries	...
add	Incomes Salary Other incomes related to profession (professional fees if you receive any)	...
less	Expenditures Essential Expenditures (fuel or cell phone bills) Household expenditures (credit card bills, grocery, electricity and water bills)	...
Total	...	...
2.	Cash Flow from Investing Activities	...
add	Incomes Returns from mutual funds and annuities Returns from shares and Exchange-traded funds, commodities or Forex investment Profit (total sale amount - invested amount) from the sale of securities and investments	...
less	Expenditures / cash outflows Premiums Invested amount in shares (optional) Fees to brokers and investment companies	...
Total	...	...
3.	Cash Flow from Assets	...
add	Incomes Incomes from properties (rent or charges against use) Incomes from assets (do not include investments) Apprised value of real estate	...
less	Expenditures Repairs Up-gradations, improvements and expansions	...
Total	...	...

Now, when you are preparing the cash flow, note that the balance of one category may appear as negative. It does not matter much, so long that your total income is greater than the total expenditure.