How To Create A Personal Finance Balance Sheet
You can create a personal balance sheet by completing the following steps, including getting all relevant documents, listing your assets and liabilities, and calculating your net worth.
1. Gather Financial Documents
Getting all your financial documents ensures you have accurate information. Documents you'll need to gather include your recent statements, such as ones from your bank, brokerage (and other investment companies), loans (like your mortgage) and any creditors.
You'll also need to tally your personal property like your vehicle and valuables and determine its current value. If you aren’t sure, consider consulting reputable sources like Kelly Blue Book for your vehicle or get the item appraised if you feel it’s necessary.
2. Make Or Use A Free Personal Financial Statement Template
You can create a personal balance sheet by making a spreadsheet on your computer or even pen and paper. While you can create one on your own, you can also use a free template found easily online — we have one below you can emulate. Or, you can download the free Rocket MoneySM mobile app to get a full picture of your finances, without the pen and paper.
3. List Your Assets
Listing your assets shows what you have so you can compare it to what you owe.
Different types of assets include:
- Cash you have in your checking and savings accounts
- Money you hold in brokerage accounts
- Retirement accounts, like a 401(k) or individual retirement account (IRA)
- The value of your house
- Investment properties
- The value of your car or other motor vehicles
- Cash value portion of your whole life insurance plan
- Valuables and collectibles such as fine art and jewelry
4. List Your Liabilities
As mentioned before, your liabilities are what you owe to others.
Common liabilities you may have include:
- Mortgage loan
- Auto loan
- Student loans
- Secured and unsecured personal loans
- Credit cards
- Unpaid medical bills
- Unpaid taxes
- Home equity loan
5. Categorize The Information And Add Up The Values
Once you’ve listed your assets and liabilities, you may want to consider categorizing them. For instance, you can sort your assets by the type — like bank and retirement accounts — or how liquid each asset is (how easy it is to withdraw money from the asset). You can sort your liabilities by type as well, such as credit cards, loans and unpaid bills.
Then, you’ll add up all your assets to arrive at a total amount, and the same goes for your liabilities.
6. Determine Your Net Worth
Once you have the sum of your assets and liabilities, it’s time to calculate your net worth.
Use the following formula:
Net worth = total assets - total liabilities
If you have a positive net worth, it means you have more assets than liabilities. A negative net worth means you owe more than what you own in assets. While a negative net worth isn’t the end of the world, it may not feel like you're in the best financial situation, especially if you owe a lot in debt. Once you know your net worth, you can take steps to improve it.
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