Personal Balance Sheet: How To Create Your Own Financial Statement

When it comes to checking in on your financial health, making a personal balance sheet is one of the main tools. Creating one can help you determine your net worth and find ways to continue to make positive changes.

While a personal balance sheet is straightforward, it’s crucial you know how to create one and that you understand what it is compared to other types of financial documents.

What Is A Personal Balance Sheet?

A personal balance sheet lists all the assets you own, along with your liabilities (what you owe, like debt payments), in one document. A personal balance sheet is one of many financial planning tools, though its purpose is to get a snapshot of your overall net worth (your assets minus your liabilities) within a specific span of time.

One of the main benefits of creating this document being able to track your spending or financial behavior in order to help you increase your net worth. Your net worth is higher when you own more assets and have more wealth. It can show you what you need to do, like pay off more of your debt (liabilities) or find ways to increase your assets, like investing more money.

Personal Balance Sheet Vs. Personal Cash Flow Statement

A personal cash flow statement helps determine what cash is coming in and going out during a certain period. For example, it will track your monthly salary, interest earned and expenses.

The difference between a balance sheet and cash flow statement is that a balance sheet shows you a snapshot of assets and liabilities over a period of time as a result of cash flow events. A cash flow statement shows how money is coming in and going out.

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 Money^SM 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.

Personal Balance Sheet Example

To help you create one, here’s an example of a personal balance sheet:

Why Is It Important To Have A Personal Balance Sheet?

Creating a balance sheet is an important step to understanding your financial situation and helping to improve it.

Identify Areas Of Debt

A personal balance sheet can help you identify areas to pay down debt. For instance, it can show you the debts where you owe the most and help you determine what you want to pay down first. You can even consider adding the interest rates of each loan you have to see which one is best to focus on — paying down debts with the highest interest rate can save you thousands of dollars or more.

Determine Areas For Growth

You can use your personal balance sheet to get a high-level overview of the assets that help you build a positive net worth and identify ways you can grow it. For example, if you see that your investments accounts aren’t where you like but you have a lot in savings, you can consider moving some of that money to your investments. Or, if you notice your savings account is low each month, you can work toward adding more money to that account.

Prepare For The Future

You can use this statement to plan for your future because it can see how far along you are in your goals, whether it’s preparing for retirement, adding a certain amount to an emergency fund, or saving for a down payment on a house.

The Bottom Line: A Personal Balance Sheet Can Make Financial Planning Easier

Creating a balance sheet is one of the first steps to helping improve your financial health. Having all your assets and liabilities outlined is a way to help you plan to achieve your financial goals, whether it’s to become debt-free or increase your retirement savings.

There’s no need to reinvent the wheel: Rocket Money mobile app is a simple way for you to create a personal balance sheet by keeping all of their accounts in one place. It can also help you keep track of their assets to help grow your net worth over time.

Download the Rocket Money app for free today.