Safaid Posh is an Urdu term for the middle class and in this article, my main emphasis is to prepare financial performance measures for this social class. You could be shocked to see that you spent more than you
expected when you look at your monthly spending on your bank account or credit
card statement. Personal financial statements are a basic technique of
accounting for income and spending that might help you avoid this dilemma. Financial statements, such as those used by businesses, provide you an overview of your financial status and can assist you in budget planning. Create a personal
balance sheet and a cash flow statement to get a comprehensive picture of your
financial status. Personal financial statements are the term for these reports.

Financial performance analysis

Financial performance analyzes, how
effectively a person is using his/her sources of income to manage to fulfill his/her
living requirements. You
must first develop a balance sheet (after knowing “how to make a personal budget” by using the “Personal budget planner template” and carefully setting personal financial goals)  in order to assess your financial condition.
A personal balance sheet, also known as a net worth statement, is a financial statement that shows what assets a person owns, what obligations he or she
owes, and how much money they have. The difference between the amount you
possess and the amount you owe is your net worth. The term “net
worth” refers to a measurement of one’s present financial situation. Among
the assets are:

• ·      Liquid assets (cash and items that can
  be quickly converted to cash)
• ·      Land and property (land and building that a
  person or family owns at market value)
• ·   Personal Property (Car, bike, computer, laptop,
  mobile phone, wristwatch, furniture & fixture, books, etc.)
• ·    Assets for Investment (securities such as
  stocks and bonds or any other investment for the sake of capital gain
  and periodic returns)
• ·   Current Liabilities (these are short-term
  obligations that must be paid off within a year). This category includes the
  majority of medical expenses, cash loans, and taxes.)
• ·    Long-Term Liabilities (These are debts that do
  not have to be paid off in full for at least a year. Long-term obligations
  include car loans, school loans, and home loans.

It is important to note that the phrase “liabilities”
only refers to money that you will owe for more than a month. A telephone bill,
for example, does not qualify as an obligation. Following is the hypothetical
balance sheet of an individual to measure his financial performance for
the year.

      Cash Flow Statement

The money that actually goes into and out of your wallet and bank
accounts is called cash flow. It is divided into two parts: cash inflow and
cash outflow. The statement of cash flows includes the money you receive, or your income, such as paycheck from a
job, an allowance from your parents, or interest earned in your savings account, and cash outflow includes all of the money you spend. The investing
activities include your investment in stock, bonds, or real estate.  A cash flow statement is
simply a summary of your cash flow during a particular period, usually a month
or a year. This summary gives you important information and feedback on your
income and spending patterns. Creating a cash flow statement is the next step to one such as the one
shown in Personal Budget Planner Template.

      Cash Flow format in
excel

In this worksheet of cash flow, measurement of financial
performance will assist you in creating a personal
budget. This will assist you in making financial performance projections in the
future. This is especially helpful when undergoing significant life changes,
such as relocating or changing employment.

In this Cash Flow Statement, we imagine a couple with young
children, one of whom is a student. Furthermore, we suppose that only the male
member of this household earns a living. We assumed that his monthly pay is Rs
90,000, and that he has supported himself and his family with this income. Please see the cash flow statement below, which shows his monthly financial performance in Excel using the planned Cash Flow format.

Because his net cash flow is positive, he has a surplus (shows good financial performance) — extra money
that may be spent or kept, depending on his financial objectives and values. A
cash excess can be deposited into an emergency fund savings account to cover
unforeseen bills or to cover living expenses if you do not get a paycheck. You
may also put any extra money into savings or investment accounts. However, if his
net cash flow was negative, he would have a deficit. A financial condition in
which more money is spent than is generated or received is referred to as a
deficit. A current and accurate cash flow statement may serve as the foundation
for developing and carrying out your spending, savings, and investment
strategies.