How to Create a Personal Balance Sheet

There’s no real “one size fits all” standard when it comes to a personal balance sheet. Different people can design a document that matches their activities and needs. The creator of any balance sheet, however, must have one main goal: to help measure spending. The personal balance sheet you create must reflect your needs while serving that overarching purpose.

Instructions

1. Look at activities that affect your cash flow before you create a personal balance sheet. List your sources of income and your bills. Write down your bank, credit and debit balances. Itemize your expenditures. Use a legal pad to sketch out how you’re going to organize your personal balance sheet. Place income sources in one group and list expenditures and bills in another group. Create another group that represents your equity.

2. Create a personal balance sheet that balances your assets against your liabilities and equity. Build a category that details whatever form to which you have converted your money. Place this with the equity section. Label the money that you’ll receive, and the money you have, as “assets.” Call your expenses “liabilities.” Call whatever form you’ve converted your money into as “equity.” Know that assets - liability = equity.

3. Open Microsoft Excel to create a personal balance sheet. List your assets on one side, then use the adjacent cells for the dollar amounts. Do the same thing for your liabilities and assets. Highlight the boxes intended for your entries, then right-click. Select “Format cells,” then “Borders.” Select the line thickness and border, then hit “OK.” Do the same thing for your liabilities and equity sections.

4. Create subtotals for your assets, liabilities and equity. Select a box to represent asset totals. Do the same thing for your liabilities and equity. Designate these as your “subtotals.” Go to the assets total box, type “=sum(,” then highlight the boxes representing your individual assets. Complete the formula by typing “).” Repeat this process for your liabilities and equity sections. Complete the personal balance sheet by selecting a box. Type “=sum(,” then select the box with the totals for your liabilities. Type “+,” then select the box with the totals for equity. Type a “)” to complete the formula.

5. After you create your personal balance sheet, give it a test run. Type in your financial assets and financial liability numbers. Your assets should equal your liabilities plus your equity.

Tips & Warnings

• The money you bring in is used to pay your expenses and bills. It also covers your miscellaneous expenditures. You want to keep track of what you've spent. Take your original total, with cash inflows, and subtract your total expenditures. The difference should equal the amount of cash left over. Cash left over, plus bills and expenditures, should equal the cash you had to begin with.

• Clearly define your assets, liabilities and equity. You have to be consistent. If you aren’t consistent, or don’t clearly define what variables you’ll use for your personal balance sheet, your numbers won’t add up. You’ll end up being frustrated, and your balance sheet won’t serve its purpose.

Resources

• Personal balance sheet template.
• Personal balance sheet investment template.