Home finance templates: Information on developing a sample personal balance sheet in order to help you determine your net worth
Sample personal balance sheet
Do you know how much you are worth? We’re not speaking of your worth as a person but how much you are worth financially? Do you have any idea? Most people don’t. It’s one of those things that seem overwhelming to people, if they even think about it at all.
In order to find out where you stand financially and to set financial goals for the next year, each year you should determine your net worth. To do that you need to do a Personal Balance Sheet (also referred to as a Net Worth Statement.)
To make a personal balance sheet you will need to set aside some time and gather your financial information into one place. You will need information on such things as checking and savings balance, information on investments, the value of your home and personal property and balances on any debt.
On the Assets side of the Personal Balance Sheet, list the balances or values of the following:
- Balance in checking account
- Balance in savings account
- Investment value
- Mutual Funds
- Savings Bonds
- Other Savings or Investments
- Value on home (This can be obtained from a local realtor or from your county appraisal district)
- Vehicles (This can be obtained from Kelly Blue Book or from a loan officer at your bank.)
- Personal property such as jewelry, clothing or furniture. (Be sure to not overvalue these. Value them as though you had to sell them on the used market.)
- Cash value of insurance policies
On the Liabilities side of the Personal Balance Sheet, list the balance of the following:
- Credit Cards
- Personal Loans
- Car Loans
- School Loans
- Other Debts
- Unpaid Taxes (income taxes or property taxes)
If you use financial software, you will have most of this with just a few key strokes. Otherwise, it might take a little digging and some phone calls to get the information together.
When applying for credit, a net worth statement is invaluable. It gives a one page statement of where you stand financially – what you owe and what you own and will tell you and your loan officer if you can comfortably take on more debt.
The good way to get an approximate value of what your net worth should be is to divide your yearly income by twelve and multiply that number by your age. That means a forty-year-old that makes $30,000 per year might have a net worth of approximately $100,000. If you find yourself more than 10% under that amount, it might be time to take another look at your debt load and what assets you own. If you owe more on something than what it is worth, it isn’t an asset, but a liability. If you find yourself at or above the projected number – congratulations! You are well on your way to personal wealth.
It is well worth doing a Personal Financial Statement each year and setting a goal to increase your net worth during the coming year. It is like using a map to know where you are going with your financial life. Without it, you might get lost somewhere along the way.