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

– Take out a loan. – Apply for financial aid. – Make a guarantee. – Design a retirement, estate, college savings, or other financial plans. – Lease a commercial office or other types of business space.

How a Personal Financial Statement Can Change Your Money Habits

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 your family. – Donating more money to a cause or organization you value. – Funding your children’s college.

What’s Included in a Personal Financial Statement

The three major components of your personal financial statement are as follows: - Balance Sheet - Income Statement - Cash Flow Statement

What to Exclude From a Personal Financial Statement

Your personal financial statements will not contain any business-related assets or liabilities. The only exception is a personal loan for your business or any other tool you’re directly accountable for.

How Often Should You Update Your Personal Financial Statements?

It’s essential to review and modify your statements every month or every other month. This way, you’ll always be up-to-date on where you stand with your finances and can make adjustments to your spending and saving habits as necessary.

Personal Financial Statement vs. Business Financial Statement

Business financial statements usually consist of a profit and loss statement and balance sheet. Personal financial statements focus on your personal life and can help you achieve your personal financial goals like buying a house, retiring, or sending your children to college.

Ways to Increase Your Net Worth

There are a variety of ways you can achieve a positive or higher figure. Here are several suggestions. - Cut Expenses - Look for New Income Sources - Buy a House - Build an Emergency Fund - Get Out of Debt - Invest - Get Insured

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