How to Create a Personal Finance Balance Sheet
When people manage their finances, many often create a personal finance balance sheet. This is a financial statement businesses and individuals use to illustrate their net worth. A personal finance balance sheet is a list of a person's assets and liabilities. The difference between these two amounts represents the person's net worth. The information on a balance sheet can change daily and is therefore referred to as a "snapshot" on a particular date. Many families create a personal balance sheet at the end of each month to compare their financial health on a monthly basis.
Other People Are Reading
Instructions
-
-
1
Gather all of your current statements. Before starting on a balance sheet, find all of your bank statements, investment statements and liabilities; which are statements showing amounts you owe.
-
2
Date the statement. A personal finance balance sheet can be created on a sheet of lined paper or on a spreadsheet program. Place the name of the statement at the top, such as "Personal Balance Sheet" and then list the date of the statement.
-
-
3
List all assets. Assets are anything you own of value that can be easily converted to cash. Begin with cash in the bank and investments that you can easily access. Then list any retirement accounts and balances and life insurance policies. After that, list the value of your home, cars and any high-priced assets you own such as a boat, jewelry, art or antiques. List each item individually along with the current value of each.
-
4
List your liabilities. Liabilities are any amounts you owe. List current obligations such as credit card debts, small loans and car loans. List each type of debt followed by its current balance. Be sure to also include your mortgage balance and any student loans. You do not need to include monthly recurring small debts such as utility bills.
-
5
Add up the value of all assets and place that value under the last asset listed. Add up the value of all liabilities and place this total under the last listed liability. Subtract the total assets minus total liabilities. This amount is your net worth and represents the amount of cash you would have if you liquidated all of your assets and paid off all debts.
-
6
Compare balances. For people who construct a balance sheet each month, they can compare the net worth amount from month to month. This can help them set goals and determine if they are moving in a positive financial direction.
-
1
References
- Photo Credit Jupiterimages/Pixland/Getty Images
