Personal Financial Statement Blog

Understanding where you stand financially is a good start to planning for the future. 

Understanding where you stand financially is a good start to planning for the future. A basic Personal Financial statement is key
to starting this process.

What is a Personal Financial Statement:

A personal financial statement is a document that outlines what your financial position is at a given point in time. The information in a personal financial statement is typically name and address, along with a detailed list of total assets and liabilities.

Personal Financial Statement Insight
A personal financial statement will show the individual’s net worth, which is assets minus liabilities. Net worth is often referred
to the amount of cash someone would have if they sold all of their assets and settled up on their debts. A positive net worth is
when the assets are more than the liabilities and a negative net worth is when the assets are less than liabilities.
Personal financial statements are a good way of tracking progress of a one’s financial health. A financial statement is often required when applying for credit, such as a mortgage. It allows the financial institution to make an informed decision on issuing credit.

What Items Are Included on a Personal Financial Statement?
There are two parts to a personal financial statement, assets and liabilities. Assets include items of value both now and in the
future that are owned by the person or household. Such items can include cash, CDs, property or land, collectibles, jewelry,
pensionsannuities and retirement plans.

Liabilities are what is owed. These can include loans, mortgages, unpaid taxes and credit card balances.

Personal financial statements do not include rented items. For example if you rent a house, you would not include it on your
personal financial statement because you do not own it, but if you own a house and are renting a house it out would include it
because it is owned by you.

Personal property with significant value should be included on a personal financial statement if an appraisal is done and the
value can be verified. Jewelry and antiques are good examples of items to include on a personal financial statement.

A personal financial statement should be done on a semi-frequent basis, when large purchases are made or when you make
new investments. It is a great way to see where the financial position at any given time. There are free templates available
online that can make this process simple and stress-free. If you haven’t done a personal financial statement, there is no time
like the present.


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