Know your personal income and major expenditure for the year

In the last blog post, I talked about changes between two financial positions (last year’s and this year’s). The difference between them is the result of total amount received in the year less total amount used in the year.

Total amount received consists of your personal incomes. Total amount used consists of your personal expenditures.

Personal Incomes

Your personal incomes could include:

  1. Salary, bonuses and commissions (from employment)
  2. Income from trade, business, profession or vocation
  3. Investment income

(I am leaving out rental income and related property expenses in this blog post. This can be tracked by each rental property. The gain or loss forms part of your total income.)

The tedious item to track is investment income received throughout the year. Despite this, I recommend a system of keeping records of all investment incomes received. With this data, one can then determine the return on investment (ROI) in a particular investment product.

Broadly speaking investment return is made of

  1. capital gain or loss realised when disposing an investment
  2. investment income received, e.g. dividend, interest (or coupon)
  3. CPF interest income

If you keep your money in CPF, the interests earned on various accounts in CPF are quite substantial in this poor investment climate.

Personal Expenditures

Knowing your personal expenditures (and includes expenditures spent on the family) has many advantages. Controlling expenditures besides earning income is one way to riches.

To make the task easier, keep track of those that are big-ticket items and those with readily available statements.

Some examples of expenditures (or cash outflow) to track:

  1. Car related expenses (road tax, car insurance, car services)
  2. Overseas travel expenses
  3. Household and IT appliances/equipment
  4. Repairs and maintenance costs
  5. Membership fees
  6. Major donations
  7. Utilities bills
  8. Phone bills
  9. NTUC Fairprice expenditures (If you have a credit card tied to NTUC Fairprice, the task of tracking is simpler.)
  10. Lived-in property related payments (e.g. property tax, S&CC charges or Mgt fees and Sinking fund)
  11. Medical expenditures
  12. Ang Pows

The list above is not exhaustive. One can start with easy tracking first and not to start with a comprehensive tracking. It gets easier subsequently.

Copyright © 2015, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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