We talked about the why and how of financial planning here recently. Let's go on to step 1 of the planning process. Let's analyze the income and expenses and we have some templates for you too.

To start with, let's seee where your income comes from and where are the areas that it goes off.

An individual earns income through some of these sources :

• Wages, salaries, perquisites
• Interest and dividend income from investments
• Income from house property
• Profits and gains of business or profession.
• Capital gains (or losses) from the sale of assets
• Gifts, prizes, etc.
• Pensions

Expenses include

• Rent,
• House Payment,
• Car Payment,
• Utilities,
• Groceries,
• Dining Out And Entertainment, Etc.
• Education of Children
• Medical Costs
• Family Functions eg. Weddings , Funerals etc.
• Old Age Support

Expenses can be divided into two categories: fixed and variable.

Fixed expenses are those that are the same every month. Examples of fixed expenses include rent and car payment. Variable expenses are those that change month to month. Examples of variable expenses include gas for your car or groceries. The next step is to prepare Income expenditure statement which will be helpful for assessing income and expenditure and to  find out investible surplus :

Income & Expenditure Statement

We will cover the next step soon. Write to