{"id":556,"date":"2021-07-07T12:00:00","date_gmt":"2021-07-07T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/what-you-can-learn-from-making-a-profit-and-loss-statement-for-your-own-life\/"},"modified":"2025-09-05T17:00:31","modified_gmt":"2025-09-05T17:00:31","slug":"what-you-can-learn-from-making-a-profit-and-loss-statement-for-your-own-life","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/what-you-can-learn-from-making-a-profit-and-loss-statement-for-your-own-life\/","title":{"rendered":"Making a \u201cProfit and Loss\u201d Statement for Your Own Life"},"content":{"rendered":"

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I remember the first time I heard someone use the analogy that you\u2019re the \u201cCFO\u201d of your own life.<\/p>\n

Being the former corporate apologist I am \u2013 sporting a deep-seated obsession with climbing the ladder and taking names \u2013 this metaphor resonated deeply with me. <\/p>\n

Imagining myself in a well-tailored skirtsuit stomping around a hypothetical boardroom in red-bottomed heels, I repeated it to myself: The CFO of my own life. <\/p>\n

There was something so intoxicatingly powerful about turning \u201cresponsible with personal finance\u201d into a \u201cChief Executive\u201d of something \u2013 of anything<\/em> \u2013 and I was in.<\/p>\n

While that metaphor feels a little silly to me now that I\u2019m no longer fixated on being absolutely drunk on corporate power 24\/7, I think there\u2019s value in taking a step back from your day-to-day life to view your decisions through the objective lens of a business.<\/p>\n

What are your assets?<\/h2>\n

Rather than approaching this question from a purely financial standpoint, think about the two most valuable things that you have \u2013 the two most valuable things that you often have to give up interchangeably, in order to get more of the other. <\/p>\n

Time and money. <\/p>\n

You can spend money to buy back your own time, or you can spend time to get more money. <\/p>\n

How you spend both matters. <\/p>\n

Setting up a P&L statement<\/h3>\n

A P&L, or Profit and Loss, statement is designed to demonstrate (a) sources of income as well as (b) costs associated with doing business.<\/p>\n

In your life, the \u201cdoing business\u201d piece is simply being you<\/em>. <\/p>\n

How much does it cost to run the business of your life? <\/p>\n

How much does running the business of your life earn you? <\/p>\n

How much time does it take to run that business?<\/p>\n

Time and earning<\/h3>\n

Let\u2019s think about time and money as equally valuable in this equation:<\/p>\n

You have 168 hours per week. <\/p>\n

Hopefully, you\u2019re spending 56 of them sleeping (that\u2019s 8 hours per night). I\u2019d say that\u2019s a pretty valuable use of your time, given what we know about the benefits of getting enough sleep. For the purposes of this P&L statement today, the sleep portion is non-negotiable.<\/p>\n

That leaves you with 112 waking hours per week to do whatever you want, or 16 per day.<\/p>\n

Now, we know that two of those 16-hour chunks \u2013 Saturday and Sunday \u2013 are yours entirely, so let\u2019s say you\u2019ve got 32 straight waking hours that totally belong to you. <\/p>\n

Then, of course, you have to hand over 40 (maybe more, maybe less) to your employer. <\/p>\n

All in all, when you subtract working hours, you have 72 waking hours per week left to do whatever you want. <\/p>\n

Now, let\u2019s say in exchange for those 40 hours per week, you\u2019re paid $50 per hour. <\/p>\n

$50 per hour equates to a salary of $100,000. <\/p>\n

Your time<\/em> is worth $50 per hour, according to your employer. <\/p>\n

(I know this feels like a demented algebra problem, but stick with me.)<\/p>\n

What are your liabilities?<\/h2>\n

When we look at a P&L statement, we have to assess all the things we pay for to run our business. <\/p>\n

If your \u201cbusiness\u201d in this sense is your life<\/em>, then it might look something like this:<\/p>\n