How do I get a surplus ?


Hello Friends,

Did you manage to do the exercise on the worksheet to find out your Networth ? Hope you have.

Ok, now that we know our Networth, its important to know our surplus. From our surplus, we will go about deciding where we can invest our capital.

So 1st things 1st. What is a Surplus ? It is an excess of Income over expenditure over a given period.

Let us understand what is Income ?

Money received in form of a salary, remuneration, earnings, commission, interest or dividend income, rental or return on any investments made or for any services provided.

A lot of this income is received on a regular basis.

What is an expense ?

Expenses maybe payouts like salaries, costs and other costs incurred to get a return or get some earnings.

Under Income and Expenses statement, there are different heads and the expenses and income are grouped under each head.

A typical Income and Expense Statement looks like this :

Your Primary Income
Your Spouse’s Income
Child Support or Alimony
Social Security Income
Disability Income
Pension Income
Investment Income
Real Estate Investment Income
Business Income
Other Income
Total Income
Necessary Expenses:
Payroll Taxes
Other income deductions
Rent or Mortgage
Property Taxes
Gas & Electric
Auto Insurance
Auto repairs
Food & Groceries (not dining out)
Clothing (necessary)
Telephone (not mobile phone)
Home Insurance
Healthcare or Insurance Costs
Dental Care or Insurance Costs
Life Insurance Costs
Student Loans
Home Repairs
Home supplies
Dry cleaning
Investment Real Estate Expenses
Business Income Expenses
Child & Baby Expenses
Other dependent expenses
Total Necessary Expenses
Discretionary Expenses:
Credit Card Bills
Auto Loan (s)
Cable or Satellite TV
Mobile Phone (s)
Home Improvement
Home Security
Garden Supplies
Entertainment (not dining out)
Dining Out
Travel & Vacation
Pets, Pet Care and Pet Food
Clothing (above what’s needed)
Internet Access
Computer Costs
Gym membership
Beer & Alcohol
Cigarettes & Tobacco
Total Discretionary Expenses

As you can see from the sample above, these are the various Heads of Income and expenses.

Expenses are deducted from income and the surplus which remains is what is left for investing.

So will you prepare a Income and Expenses Statement for yourself ? Its so easy….

More next time….



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