All About the Personal Financial Statement

By keeping tabs on your finances, you can create a secure and fulfilling future. That’s where a personal financial statement comes in.

Why You Need a Personal Financial Statement

There are several reasons you may want to create a personal financial statement. It can help you if you’d like to: – Take out a loan. – Apply for financial aid. – Make a guarantee. – Design a retirement, estate, college savings, or other financial plans.

How a Personal Financial Statement Can Change Your Money Habits

A personal financial statement can be instrumental in the way you think about your money and manage it.  Here’s why: When you see your net worth, you’ll realize that many of your previous and future behaviors affect that figure.

A high, positive net worth, for example, may mean that you’re closer to your dream of: – Buying a dream home or rental property. – Retiring early. – Working part-time instead of full-time so you can spend more time with

Balance Sheet Your balance sheet is an overview of your personal net worth and will list all of your assets and liabilities.  Assets may include your home, car, savings accounts, and investment accounts.

What’s Included in a Personal Financial Statement

Income Statement Your income statement will consist of your salary, bonuses, and commissions. If you have other income from interest, a side job, or dividends, you’ll include this information as well. Your income statement will also outline your insurance premiums, income taxes, and any other consistent cash outflows you may have.

Cash Flow Statement A cash flow statement shows how you spend your money. It breaks down your cash into three main categories: fixed, non-discretionary expenses, variable, non-discretionary expenses, and discretionary expenses or fun money. It bridges the void of information from the Balance Sheet and Income Statement.

What to Exclude From a Personal Financial Statement Now that you know what’s included in personal financial statements let’s discuss what they should exclude. Your personal financial statements will not contain any business-related assets or liabilities.

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