of income and the most frequent expenses, broken down into familiar categories. If you currently do not have timberland uk one of the sources of income listed, leave the lines blank. Even so, it will be instructive for you to see the many different potential sources of income. The same holds true on the expense side. If you are not spending money for day care or a health club membership, leave it blank. Still, this list of expenses will give you some idea of the range of ways people spend their money. The best way to complete this worksheet is to take your bank, brokerage, insurance, and other statements, last year’s tax return, along with your last year-end paycheck and other records you have accumulated for the past six months, and fill in the real numbers. This is not an exercise in wishful thinking; this is a document that will show you, for better or worse, how you actually are earning and spending your money now. It’s no use inflating the income and lowballing the expenses because you’re the only one who will be hurt by not knowing the truth. You don’t have to show the results to anyone—not even your mother. SOURCES OF INCOME The income side of the Cash Flow Worksheet is broken into six categories: earned, self-employment, family, government, retirement, and investment income. The following is a brief guide to what kinds of income fall into each category. (For each of the six categories, we have provided a line on the worksheet to subtotal the income, which will make it easier to add up your total income at the end of the worksheet.) Earned income. The most common and largest source of income for most people, of course, is their salary from a job. You should note on the worksheet your net take-home pay, after deductions. Other sources of earned income include commissions paid to salespeople, bonuses for extraordinary performance, overtime, and tips. You may also be entitled to stock options, which give you the right to buy your company’s stock at a preset price, usually below the current market value, and the right to sell the shares for a profit. There are also many forms of deferred compensation that can be paid out to you, based on your performance or in accordance with the provisions of a contract. If you expect to exercise stock options or receive deferred compensation in the next year, you should note this on the worksheet. CHAPTER 1: Giving Yourself a Financial Check timberland shoes up Self-employment income. If you work for yourself or a closely held partnership, most of your income will come from this income category. Because taxes or other deductions are not normally withheld from freelance income, you will have to pay income and self-employment taxes on this money on a quarterly basis through estimated tax filings. Finally, if you are a writer, a musician, a painter, or an inventor, you may be ge timberland boat shoes tting regular royalty income from sales of your books, music, paintings, or inventions. Family income. If you are lucky enough to come from a famil cheap timberlands y that has put money in a trust for you, this can be a significant source of regular income. You should list on the worksheet the income produced from the assets you inherited or the assets in a trust for you. If you receive regular (or even irregular) gifts from family members, the total amount should also be li timberland earthkeepers sted here. Finally, if you are divorced and receive alimony or child support, that income should be entered on the worksheet. Government income. You might qualify to receive regular checks from the federal or state government. If your other income is low enough, you can get welfare or Aid to Families with Dependent Children (AFDC) funds. If you have had a disabling accident, you may qualify for disability insurance or workers’ compensation insurance. If you had a job, but were laid off, you are entitled to unemployment insurance for several months. Note these amounts on the worksheet. Retirement income. There are several sources of income once you have retired, assuming you have been building up retirement assets for most of your working life. You can receive a monthly payment from an annuity, issued by an insurance company, based on your lifelong contributions to the ann ladies timberland boots uity. Alternatively, you can take the lump sum you receive from your employer once y timberland waterproof boots ou retire (from any pension plan you may have had) and buy an annuity from an insurance company to ensure a fixed monthly income for the res timberland jeans t of your life. Similarly, starting at age 591.2, you can take money out of your IRA or Keogh account without penalty. (You must pay a 10 pe black timberland boots rcent penalty if you withdraw from these accounts sooner.) If you worked at a company that offered a profit-sharing plan, a salary reduction plan, or a pension plan, you can have the earnings paid to you in monthly installments. Finally, as long as Social Security was keepin timberland chukka g track of how many years you worked and what you were earning, you will get monthly Social Security checks as well. Investment income. This category offers the most possibilities because there are so many kinds of bank instruments, bonds, stocks, mutual funds, and limited partnerships designed to throw off income. Among bank products, you can earn regular interest income from certificates of deposit (CDs), money-market deposit accounts, NOW accounts, on which you can write checks, and other savings accounts such as passbook accounts. Two additional kinds of short-term interest- bearing accounts are money-market mutual funds, which come in both taxable and tax-exempt varieties, and Treasury bills, which come in three-month, six-month, and one-year maturities. PART ONE: Maximizing Your Investment Options Among income-producing bonds, your options include corporate bonds (issued by corporations); convertible bonds (also issued by companies, but with the added option of converting the bonds into company stock in the future); Treasury notes maturing in up to 10 years and Treasury bonds coming due in up to 30 years; municipal bonds (issued by states and localities and paying interest free from federal and usually state taxes); and foreign bonds (issued by non-U.S. corporations or foreign governments). In addition, you may be counting on income produced from selling any of these kinds of bonds for a profit, listed on the worksheet as capital gains from bond sales. Similarly, you can produce regular income by investing in bond mutual funds that buy any of these taxable or tax-exempt bonds. Stocks also give you several options for producing regular income. Many individual stocks pay quarterly dividends, with some, like public utilities, yielding 5 percent or more. Many mutual funds investing in stocks also are designed to pay a significant monthly dividend to income-oriented investors. Plus, most mutual funds make a yearly payout of all the capital gains they have accumulated during the year, known as a capital gains distribution. If you plan to sell some of your stocks or stock funds to realize a profit, that should be entered on the worksheet as income from capital gains. Limited partnerships, though their name has been tarnished by the many partnership debacles of the 1980s, still provide a viable vehicle for producing regular income. Partnerships can invest in rental real estate, oil and gas wells, or leasing of equipment such as airplanes or computers, all of which provide a monthly stream of income. If you have any interests in such partnerships, enter the annual income you expect from them on the worksheet. Next, total the income you ex timberland earthkeepers pect to receive in all six categories, and add any other income sources as well, to create your grand total: annual income. EXPENSES Now you’re going to figure out where all of that income disappears every year. Your expenses can be divided roughly into two categories: what is fixed, meaning it must be paid on an annual or a monthly basis, and what is flexible, meaning you have more control over whether and whe timberland shoes uk n you spend it. By filling out the expense portion of the worksheet in these two categories, you will be able to see what percentage of your income is taken up by fixed expenses. This will give you a clearer idea of how much money you have left over for discretionary spending. There are seven categories that should be considered fixed expenses: automobile-related expenses, family expenses, home-related expenses, insurance, savings and investments, taxes, and utilities. Automobile-related expenses. Most people either lease their car from the dealer or buy it with an auto loan. In either case, you will have to make a monthly payment until the lease is up or the loan is paid off. To keep the car running, of course, you will need gasoline in the tank and oil under the hood. CHAPTER 1: Giving Yourself a Financial Checkup Family expenses. It’s hard to raise children without feeding them (they will start to complain), so add food and beverages to your regular fixed expenses. If your children go to a school that charges tuition, this also goes into the fixed expenses column. If you are divorced and still supporting your spouse and your children, count alimony and child support as fixed expenses. Home-related expenses. You’ve got to live