« Introduction to Cash Flow Statements | Main | Bogleheads’ October Project - Chapter 8 »
How to Create a Cash Flow Statement
By JLP | October 10, 2006
With my last post, I introduced the cash flow statement. With this post I want us to look at a model cash flow statement so that we can see how it is arranged and what information we can glean from it.
Before we get started, I want to mention a couple of things about cash flow statements in general. Cash flow statements are used to track the sources and uses of income. And, although it doesn’t seem to make sense, investing in a 401(k) or other investment account is considered a “use” of funds. Your cash flow statement should be prepared at least once a year and updated monthly to reflect changes in your situation.
Below is a model cash flow statement that I put together. I meant for it to coincide with the net worth statement.
|
CASH FLOW STATEMENT |
|
|
Sources of Cash |
|
|
Wages/Salary |
$105,000 |
|
Interest |
$2,000 |
|
Mutual Fund Distributions |
$0 |
|
Other |
$0 |
|
Total Sources of Cash |
$107,000 |
|
Uses of Cash |
|
|
Payroll Deductions |
|
|
Federal Income Tax |
$23,000 |
|
Social Security & Medicare Tax |
$7,103 |
|
State Income Tax |
$0 |
|
Medical Insurance Premiums |
$2,000 |
|
401(k) Plan |
$12,000 |
|
Total Payroll Deductions |
$44,103 |
|
Fixed Expenses |
|
|
Mortgage |
$11,600 |
|
Loan Payments |
$2,000 |
|
Utilities |
$6,000 |
|
Insurance |
$3,000 |
|
Property Taxes |
$3,500 |
|
Investment Plans |
$4,000 |
|
Total Fixed Expenses |
$30,100 |
|
Variable Expenses |
|
|
Charitable Contributions |
$10,500 |
|
Clothing |
$2,500 |
|
Education |
$4,000 |
|
Food |
$6,000 |
|
Gasoline |
$3,200 |
|
Gifts |
$2,000 |
|
Travel/Vacation |
$2,500 |
|
Total Variable Expenses |
$30,700 |
|
Total Expenses |
$104,903 |
|
Positive/(negative) Yearly Cash Flow |
$2,098 |
With my next post, I’ll go into more detail about what to look for in a cash flow statement and how it ties together with your net worth statement.
Topics: Basics, Financial Planning |