Skip to main content

If you are like most people, you take a look at your monthly credit card and bank statements and wonder how you spent more than you thought you did. There is a way to avoid this dilemma. Having personal financial statements is a simple accounting method for calculating your income and expenditures. Corporations use financial statements to assess their financial health and help with financial planning. You can use a personal financial statement in the same way and achieve the same goals.

man calculating assets and financial reports

Image by Firmbee from Pixabay

What Personal Financial Statements Are

Personal financial statements are sketches of individuals’ financial situations; they list in some detail the components of peoples’ assets and liabilities. Personal financial statements also often include Income Statements, which allow for a picture of income and expenditure over time to be drawn. Personal financial statements are employed to keep account of changes in peoples’ financial positions, and as a reference point for looking to your financial future.

When you apply for loans from financial institutions, it’s likely that you will be asked to provide your financial records so that the institution can judge the level of risk you pose. Your debt/income ratio is important here for determining the amount of the service payments you’ll have to make on the loan. It’s a good idea to have this information on hand; if you’re familiar with your financial situation, you’ll be more likely to make good financial decisions. This is also true for the plans you make about your financial future, such as retirement plans. Having an updated personal financial statement will help you to keep track of your progress toward meeting your retirement goals.

Preparing your Personal Financial Statement

For all the reasons given above, preparing a personal financial statement will reward you far beyond the time and work you put into it.

The two most important categories found in personal financial statements are assets and liabilities. Your assets are the monetary value of your possessions, and liabilities are the monetary value of your debts. It’s also a good idea to include your personal information in your financial statement, like your name and address, as well as the date on which you complete the document. This is in case you ever need to use your personal financial statement to prove you can be trusted to pay back a loan. This is true even though financial institutions will usually provide with their own blank template as part of the application process, since you’ll be able to refer quickly to the information you’ll need to fill it out.

Two Types of Personal Financial Statements

You can sum up your personal finances by using two different personal financial statements. You need a personal cash flow statement that demonstrates how much you make each month And you will need a balance sheet to get an idea of how well your inflow and outflow balance out.

Personal Cash Flow Statements

Personal cash flow statements keep an account of cash inflows and outflows. This shows you your net cash flow for a designated time period. A cash inflow usually includes things like:

  • Your salaries
  • Savings account interest
  • Investment dividends
  • Capital gains

But it can also include money you took in from selling assets like cars or houses. Basically, cash inflow refers to anything that brings money in. Cash outflow represents all of your expenses, no matter how large or small. Some common cash outflows include:

  • Mortgage payment or rent
  • Utilities
  • Groceries
  • Gas
  • Entertainment expenses

You want to determine your cash inflows and outflows so you can calculate your net cash flow. To calculate net cash flow, subtract your total cash outflow from your total cash inflow. If you end up with a positive net cash flow, you earned more than you spent. That is good because you have money left over during the period you are assessing. However, if your result is a negative net cash flow, then you spent more money than what you brought in.

Personal Balance Sheets

Another type of financial statement is a balance sheet. A personal balance sheet gives you an overall view of your wealth at any point in time. It contains a summary of what you own (assets), and what you owe (liabilities), and your net worth. Subtracting liabilities from assets results in your net worth.

personal assets house and car

Image by ADD from Pixabay

3 Asset Categories

All assets fall into three different and distinct categories:

  • Liquid Assets. These assets can be sold and turned into cash without losing any value. They include cash, checking accounts, savings accounts, and money market accounts. Some like to include CDs (certificate of deposit) in this category. However, the problem is when you withdraw funds, most institutions charge a withdrawal fee which reduces the investment’s value.
  • Large Assets. These assets include physical things like your house, vehicles, boats, furniture, and artwork. Use the market value for these items when you include them on your personal balance sheet. If you are not sure of their market value, use a recent sales price for similar items.
  • Investments. Bonds, CDs, stocks, real estate, and mutual funds are examples of investment assets. These should be recorded at their current market values.

Liabilities

In short, liabilities are what you owe. These include your current bills, payments you still owe on assets like your house and cars, credit card balances, and any other outstanding loans.

Net Worth

Your net worth is a simple calculation using the information obtained from your outflow and inflow. Just subtract what you owe, from the amount that you own. The final numbers represent your wealth. It is a numerical representation of what you own after all your debts are paid off. There are a few ways to increase your net worth. You can either increase your cash or increase the value of assets you own. Just be cautious and don’t increase your liabilities while you are trying to increase your assets. For example, you can increase your assets by purchasing a house. But taking out a mortgage on the house only increases your assets if the house is worth more than the mortgage. It’s the same when trying to reduce liabilities.  You want to achieve a decrease in what you owe without diminishing your assets.

How to Calculate your Net Worth with a Personal Financial Statement

If you don’t know your net worth, or if you’re not targeting a specific net worth, it might be time to prepare a personal financial statement.

A personal financial statement is a sketch of your personal assets and liabilities that allows you to calculate and keep track of your net worth. This kind of document is also useful for when it comes to time to think about investing as an easy reference to draw on when applying for loans from financial institutions.

What’s the Use of a Personal Financial Statement?

As we’ve seen, your assets minus your liabilities equals your net worth. Your net worth is important because it is used to determine your financial standing, which is an important part of the loan process that financial institutions use to judge whether you can be trusted to repay what you owe.

To increase your net worth, you can start by paying off your debts in order to reduce your liabilities. Work hard and earn that raise. Spend your money wisely and make smart investments.

After you’ve prepared your personal financial statement, you might discover that your net worth is negative. Although this isn’t an uncommon problem, especially for younger people who haven’t paid off student loans, you should try to figure out how to change your financial situation. Taking a second job, reducing day-to-day expenses, or talking with a financial advisor like the professionals here at NumberSquad can help.

Keep your Personal Financial Statement Up-to-Date

Once you have an idea of your financial situation, it’s important to remember that your situation is always changing, and sometimes in major ways. That’s why we recommend that you revisit your personal financial statement regularly. This will help you keep a realistic picture of your net worth in mind when it comes to time to make decisions, big or small.

Bringing Personal Financial Statements all Together

Personal financial statements make great tools to monitor your spending and increasing your net worth. They are not two pieces of information. Actually, they work together as one. Your cash flow statement contains your net cash flow, which helps you increase your net worth. A positive cash flow in any time period can help pay off liabilities or be used to acquire assets. Applying net cash flow toward net worth is an exceptional way to increase your assets without increasing your liabilities. Additionally, it helps decrease your liabilities without increasing your assets.

 

xosotin chelseathông tin chuyển nhượngcâu lạc bộ bóng đá arsenalbóng đá atalantabundesligacầu thủ haalandUEFAevertonxosofutebol ao vivofutemaxmulticanaisonbethttps://bsport.fithttps://onbet88.ooohttps://i9bet.bizhttps://hi88.ooohttps://okvip.athttps://f8bet.athttps://fb88.cashhttps://vn88.cashhttps://shbet.atbóng đá world cupbóng đá inter milantin juventusbenzemala ligaclb leicester cityMUman citymessi lionelsalahnapolineymarpsgronaldoserie atottenhamvalenciaAS ROMALeverkusenac milanmbappenapolinewcastleaston villaliverpoolfa cupreal madridpremier leagueAjaxbao bong da247EPLbarcelonabournemouthaff cupasean footballbên lề sân cỏbáo bóng đá mớibóng đá cúp thế giớitin bóng đá ViệtUEFAbáo bóng đá việt namHuyền thoại bóng đágiải ngoại hạng anhSeagametap chi bong da the gioitin bong da lutrận đấu hôm nayviệt nam bóng đátin nong bong daBóng đá nữthể thao 7m24h bóng đábóng đá hôm naythe thao ngoai hang anhtin nhanh bóng đáphòng thay đồ bóng đábóng đá phủikèo nhà cái onbetbóng đá lu 2thông tin phòng thay đồthe thao vuaapp đánh lô đềdudoanxosoxổ số giải đặc biệthôm nay xổ sốkèo đẹp hôm nayketquaxosokq xskqxsmnsoi cầu ba miềnsoi cau thong kesxkt hôm naythế giới xổ sốxổ số 24hxo.soxoso3mienxo so ba mienxoso dac bietxosodientoanxổ số dự đoánvé số chiều xổxoso ket quaxosokienthietxoso kq hôm nayxoso ktxổ số megaxổ số mới nhất hôm nayxoso truc tiepxoso ViệtSX3MIENxs dự đoánxs mien bac hom nayxs miên namxsmientrungxsmn thu 7con số may mắn hôm nayKQXS 3 miền Bắc Trung Nam Nhanhdự đoán xổ số 3 miềndò vé sốdu doan xo so hom nayket qua xo xoket qua xo so.vntrúng thưởng xo sokq xoso trực tiếpket qua xskqxs 247số miền nams0x0 mienbacxosobamien hôm naysố đẹp hôm naysố đẹp trực tuyếnnuôi số đẹpxo so hom quaxoso ketquaxstruc tiep hom nayxổ số kiến thiết trực tiếpxổ số kq hôm nayso xo kq trực tuyenkết quả xổ số miền bắc trực tiếpxo so miền namxổ số miền nam trực tiếptrực tiếp xổ số hôm nayket wa xsKQ XOSOxoso onlinexo so truc tiep hom nayxsttso mien bac trong ngàyKQXS3Msố so mien bacdu doan xo so onlinedu doan cau loxổ số kenokqxs vnKQXOSOKQXS hôm naytrực tiếp kết quả xổ số ba miềncap lo dep nhat hom naysoi cầu chuẩn hôm nayso ket qua xo soXem kết quả xổ số nhanh nhấtSX3MIENXSMB chủ nhậtKQXSMNkết quả mở giải trực tuyếnGiờ vàng chốt số OnlineĐánh Đề Con Gìdò số miền namdò vé số hôm nayso mo so debach thủ lô đẹp nhất hôm naycầu đề hôm naykết quả xổ số kiến thiết toàn quốccau dep 88xsmb rong bach kimket qua xs 2023dự đoán xổ số hàng ngàyBạch thủ đề miền BắcSoi Cầu MB thần tàisoi cau vip 247soi cầu tốtsoi cầu miễn phísoi cau mb vipxsmb hom nayxs vietlottxsmn hôm naycầu lô đẹpthống kê lô kép xổ số miền Bắcquay thử xsmnxổ số thần tàiQuay thử XSMTxổ số chiều nayxo so mien nam hom nayweb đánh lô đề trực tuyến uy tínKQXS hôm nayxsmb ngày hôm nayXSMT chủ nhậtxổ số Power 6/55KQXS A trúng roycao thủ chốt sốbảng xổ số đặc biệtsoi cầu 247 vipsoi cầu wap 666Soi cầu miễn phí 888 VIPSoi Cau Chuan MBđộc thủ desố miền bắcthần tài cho sốKết quả xổ số thần tàiXem trực tiếp xổ sốXIN SỐ THẦN TÀI THỔ ĐỊACầu lô số đẹplô đẹp vip 24hsoi cầu miễn phí 888xổ số kiến thiết chiều nayXSMN thứ 7 hàng tuầnKết quả Xổ số Hồ Chí Minhnhà cái xổ số Việt NamXổ Số Đại PhátXổ số mới nhất Hôm Nayso xo mb hom nayxxmb88quay thu mbXo so Minh ChinhXS Minh Ngọc trực tiếp hôm nayXSMN 88XSTDxs than taixổ số UY TIN NHẤTxs vietlott 88SOI CẦU SIÊU CHUẨNSoiCauVietlô đẹp hôm nay vipket qua so xo hom naykqxsmb 30 ngàydự đoán xổ số 3 miềnSoi cầu 3 càng chuẩn xácbạch thủ lônuoi lo chuanbắt lô chuẩn theo ngàykq xo-solô 3 càngnuôi lô đề siêu vipcầu Lô Xiên XSMBđề về bao nhiêuSoi cầu x3xổ số kiến thiết ngày hôm nayquay thử xsmttruc tiep kết quả sxmntrực tiếp miền bắckết quả xổ số chấm vnbảng xs đặc biệt năm 2023soi cau xsmbxổ số hà nội hôm naysxmtxsmt hôm nayxs truc tiep mbketqua xo so onlinekqxs onlinexo số hôm nayXS3MTin xs hôm nayxsmn thu2XSMN hom nayxổ số miền bắc trực tiếp hôm naySO XOxsmbsxmn hôm nay188betlink188 xo sosoi cầu vip 88lô tô việtsoi lô việtXS247xs ba miềnchốt lô đẹp nhất hôm naychốt số xsmbCHƠI LÔ TÔsoi cau mn hom naychốt lô chuẩndu doan sxmtdự đoán xổ số onlinerồng bạch kim chốt 3 càng miễn phí hôm naythống kê lô gan miền bắcdàn đề lôCầu Kèo Đặc Biệtchốt cầu may mắnkết quả xổ số miền bắc hômSoi cầu vàng 777thẻ bài onlinedu doan mn 888soi cầu miền nam vipsoi cầu mt vipdàn de hôm nay7 cao thủ chốt sốsoi cau mien phi 7777 cao thủ chốt số nức tiếng3 càng miền bắcrồng bạch kim 777dàn de bất bạion newsddxsmn188betw88w88789bettf88sin88suvipsunwintf88five8812betsv88vn88Top 10 nhà cái uy tínsky88iwinlucky88nhacaisin88oxbetm88vn88w88789betiwinf8betrio66rio66lucky88oxbetvn88188bet789betMay-88five88one88sin88bk88xbetoxbetMU88188BETSV88RIO66ONBET88188betM88M88SV88Jun-68Jun-88one88iwinv9betw388OXBETw388w388onbetonbetonbetonbet88onbet88onbet88onbet88onbetonbetonbetonbetqh88mu88Nhà cái uy tínpog79vp777vp777vipbetvipbetuk88uk88typhu88typhu88tk88tk88sm66sm66me88me888live8live8livesm66me88win798livesm66me88win79pog79pog79vp777vp777uk88uk88tk88tk88luck8luck8kingbet86kingbet86k188k188hr99hr99123b8xbetvnvipbetsv66zbettaisunwin-vntyphu88vn138vwinvwinvi68ee881xbetrio66zbetvn138i9betvipfi88clubcf68onbet88ee88typhu88onbetonbetkhuyenmai12bet-moblie12betmoblietaimienphi247vi68clupcf68clupvipbeti9betqh88onb123onbefsoi cầunổ hũbắn cáđá gàđá gàgame bàicasinosoi cầuxóc đĩagame bàigiải mã giấc mơbầu cuaslot gamecasinonổ hủdàn đềBắn cácasinodàn đềnổ hũtài xỉuslot gamecasinobắn cáđá gàgame bàithể thaogame bàisoi cầukqsssoi cầucờ tướngbắn cágame bàixóc đĩaAG百家乐AG百家乐AG真人AG真人爱游戏华体会华体会im体育kok体育开云体育开云体育开云体育乐鱼体育乐鱼体育欧宝体育ob体育亚博体育亚博体育亚博体育亚博体育亚博体育亚博体育开云体育开云体育棋牌棋牌沙巴体育买球平台新葡京娱乐开云体育mu88qh88