Income and expenses are at the core of personal finances. In fact, you can summarize personal finance as increasing income, reducing expenses, and investing the difference. Income and expenses together is also known as your Cashflow Statement. Just like companies have cashflow statements, you need to know your own personal finance cashflow statement.


Income and Expenses

One of the key areas to look into before investing or even saving is to examine your income and expenses. The one key test of financial solvency is whether your monthly expenses are less than your monthly income. If you find yours to be off balance, a little calibrating is all that is needed to look into increasing your income and/or reducing expenses.


Reducing Expenses

It is beneficial to track your expenses outflow to know how you are spending your money. This can be done with personal finances tracking apps/software, a spreadsheet or using pen and paper.

You will want to review how your expenses are being spent in various categories and look at areas where you can reduce expenses and/or leakages in money.

– Cancel non-free memberships that you do not use frequently  (e.g. gym membership).
– Reduce eating out expenses (i.e. cooking at home, pot luck with friends).
– Change your driving style to reduce fuel consumption.


Increasing Income

A better way to improve your financial standing starts with increasing your income. This can be done in various ways, whether