Putting Together A Personal Financial Statement

Over the past couple of weeks we’ve focused on getting financially healthy for the New Year. This includes getting a handle on what you’re spending on a weekly or monthly basis, then analyzing that information to help shape a budget that you can live with going forward.

Now let’s take a look at preparing a personal financial statement. This document is intended to give you a good idea of where you stand financially, both from the perspective of what you own and what you owe. A personal financial statement is a valuable resource to refer to in such situations as changing careers and considering retirement.

A balance sheet is part of creating a personal financial statement. It essentially shows what’s owned by you and what you owe. In other words, it reflects your personal net worth.

Preparing a balance sheet is a straightforward process. Using either a software program or just a pen and paper, set up a column on the left for assets, and a column on the right for liabilities. Assets should include your stock holdings, bank account balances, and any property you possess such as real estate. Liabilities, meanwhile, should list such things as your mortgage, car loans, credit card debt, and college loans.

Now subtract your liabilities from your assets and you’ll come up with your net worth.

The other facet of a personal financial statement is an income statement. This statement shows how much you earned and how much you spent in a specific time frame, such as the past month or year. Here’s what to do to prepare this statement:

  • Create a column that shows all of your income, including salaries, bonuses, rental income, etc.
  • Create another column for all of your expenses, such as mortgage payments, utility bills, grocery bills, etc.
  • If you have income or expenses that aren’t recurring, create a column for these. Examples would be a significant tax return or a major home repair.

Determine the difference between your income and expenses to arrive at your net income.

If you need assistance in preparing your personal financial statement, don’t hesitate to seek help from a financial advisor. At BankFive, we can provide expert guidance in putting together your statement, as well as assist you with other financial needs.

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