How money flows in personal balance sheet? Read more about tracking expense in excel. These savings in turn will take care of all the budgeted expenses. To manage these liability, savings must be maintained. What is liability savings? I have considered all expense which are not used to buy assets as a liability. But in balance sheet for individuals, a better phrase will be “Liability Savings”. Liability Savings: In traditional balance sheets of companies, the term uses in “Liability”.In the asset side of balance sheet, the current market value all assets purchases by an individual is recorded. There can be two type of expenses: (1) Assets Purchase, & (2) Liabilities Purchase. Asset: The income shown in cash flow report is used to manage expenses.Read more about 50-30-20 rule of budgeting. Finally, it balances the income with the budgeted expenses. Secondly, it quantifies all expenses to fix their budget. First, it lists down all possible expense line items. Expense: The expense side of cash flow report is basically an “ expense budget“.Read more about building an alternative income source.
Alternative income can be generated from savings and investments. Income: For an average person, there can be two source income: (a) salary & (b) alternative Income.This diagram highlights the main constituents of a personal balance sheet suitable for an individual: Cash FLOW REPORT
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