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Sample Personal Financial Statement

Most household budgets are quite dynamic and, like a river or stream, are constantly changing and subject to unexpected disruptions. So how do you know what the financial health of your household is at any given point? If you want to see a snapshot of your finances at a particular point in time or wish to monitor fluctuations in the value of your assets or level of liabilities and net worth, you will want to create a personal financial statement. This statement is split into two main components: assets and liabilities. While assets relate to things such as income, securities, and properties, liabilities refer to things such as debts, unpdaid bills, and overdue taxes.

The Importance of Using Personal Financial Statements

Each time you prepare a such a statement, you create a snapshot of your finances at a particular point in time. To monitor fluctuations in your finances, you may choose to prepare a financial statement periodically (on a set date every month, quarter, bi-yearly etc.) and compare statements. You can also use these financial statements to experiment with different budgetary options and to plan for certain possible outcomes.

The following sample personal financial statement will help you get started. See FindLaw's Debt Relief and What is Bankruptcy? sections for more resources.

Cash (in the bank, CDs, money market accounts) $__________
Checking $__________
Savings $__________
Securities (mutual funds, college savings, etc.) $__________
Accounts/Notes Receivable $__________
Real Estate (resale value of your home) $__________
Household Goods $__________
Vehicles (resale value) $__________
Cash Value Life Insurance $__________
401(k) Plan $__________
Individual Retirement Accounts $__________
Other Assets $__________
TOTAL ASSETS $__________
Notes Payable $__________
Accounts/Bills Due $__________
Credit Cards Payable $__________
Vehicle Loans $__________
Unpaid Taxes $__________
Real Estate Mortgages Payable (remaining balance) $__________
Land Contracts Payable $__________
Life Insurance Loans $__________
Student Loans $__________
Other Liabilities $__________
NET WORTH $__________
(Assets always equal Total Liabilities and Net Worth)

How to Use a Personal Financial Statement

It is important to be as honest as you can when calculating your liabilities and income, since you will be able to make better decisions with the most accurate information. And if your net worth is negative, this doesn't automatically mean you're in financial trouble (and likewise, even those with a positive net worth can have some financial problems to iron out). Of course, any personal financial statement needs additional context in order to have sufficient meaning. For instance, someone pursuing an advanced degree may be racking up debt while bringing in very little income, but that educational investment purportedly will pay off in a higher salary after graduation.

Once you document all asset and liability figures, total your assets and liabilities. Next, subtract total liabilities from total assets to determine your net worth figure. Certain types of debt, such as a mortgage, can be considered "positive" debts as long as you're able to consistently make your monthly mortgage payments. Your ultimate goal is to regularly increase your assets while making sure your liabilities are kept in check and on a downward trajectory. And keep in mind that the cost of carrying debt (particularly credit card debt) is reflected in interest rates that are generally higher for those with lower credit scores.

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