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A personal financial statement is a written statement or sheet that describes a person's financial situation at a specific time.

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A Personal Financial Statement is what?

The statement normally includes a summary of the total assets and liabilities as well as general information about the person, like name and address. 

The statement can be used by people to apply for credit and to keep track of their wealth and financial objectives.

Key Lessons:

  • An individual’s or couple’s assets and debts are listed in a personal financial statement.
  • A person’s net worth is calculated by reducing liabilities from assets; a positive net worth indicates that there are more assets than liabilities.
  • As the values of cash flows change over time, net worth may also alter.
  • Personal financial statements are useful when asking for credit and keeping track of finances and goals.
  • Income and costs are typically listed on a separate sheet called the income statement, though they could also be included in a personal financial statement.

Why would someone need a personal financial statement?

You can use this statement as a tool to examine your present financial situation, track your net worth, and set financial goals

Bankers regularly look at these documents when a customer applies for credit or a loan, including a house.

A personal financial statement’s main elements

The following fundamental components should be included in a personal financial statement:

  1. Your entire legal name, address, phone number, and any other contact details you’d like to submit are all considered to be personal information. This personal information is used to identify the person for whom the personal financial statement is intended. You could also wish to mention your company name if you’re an entrepreneur looking for a loan or investment.
  2. A balance sheet, also known as a “statement of financial position,” is a breakdown of your assets and liabilities that also determines your “net worth” by deducting the sum of your liabilities from the total of your assets.
  • Your net worth, for instance, would be $35,000 if you had $100,000 in assets and $65,000 in liabilities.
  • Because the valuable property needs to be valued, you’ll need to do some study to accurately complete this section of your financial statement. Additionally, you need to check the status of all of your unpaid bills and get Your credit report.

Describe each of the assets and liabilities mentioned on your balance sheet in detail in the supplementary below. You could also indicate any other liabilities or personal income here.

What are liabilities and assets?

Accounts with a balance that must be reduced through regular billing are referred to as liabilities. 

Monthly accrued costs (such as rent, food, insurance, cable, cell phone, and other living expenses) are not included.

However, common responsibilities do contain the following balances:

  • Bank cards
  • education loans
  • Delayed taxes or unpaid medical bills
  • loans for vehicles or mortgages
  • Co-signed loans that you have made

Assets are financial investments and valuable property that can be used as security to secure a loan. 

Lenders generally request to have your salary, and other sources of income reported separately to better understand your capacity to manage responsibilities, even though they are not listed as assets. 

Typical assets are:

  • Savings, certificates, and money market account balances.
  • Investment holdings include equities, ETFs, mutual funds, bonds, annuities, life insurance cash surrender values, and commodities.
  • 401(k) and IRA accounts for retirement.
  • Actual estate.
  • Vehicles, boats, jewelry, or collections are examples of valuable personal property.