Personal financial statements are created for business owners.
The business itself is one of the assets owned by the person, which makes personal financial statements different.Your personal financial statements can be used to reconcile the business's assets and liabilities.Ownership in and earnings from the business will only be line items in the asset section of the personal balance sheet.
Step 1: Put a balance sheet together.
The first step in creating personal financial statements is to create a Balance Sheet, which shows your net worth at a specific point in time, such as the end of the year.The assets and liabilities are listed in columns on the balance sheet.To start your balance sheet, open a new sheet in a spreadsheet program.Start with a column labeled "Assets."You will list your assets under this heading.To the left of their values, write the asset categories.Two side-by-side columns will split up your assets.If you apply for a loan, you may be required to provide a personal financial statement.To get the proper document, be sure to fill it out as instructed.
Step 2: The value of your liquid assets can be determined.
Liquid assets can be easily turned into cash.Current balances of personal cash reserves, checking account, and saving account are included.Money market account balances should be recorded in this category.You can find your total liquid assets by summing up the balances of these accounts.If you are creating your own balance sheet, you can include all of them under one category.Liquid assets are often referred to as cash and cash equivalents.You can list this amount as "notes receivable" if you are personally owed money.
Step 3: You can find the value of the investments.
Investments can be held in investment or brokerage accounts.The cash value of your life insurance policy is included.The date of balance sheet creation is when these assets should be recorded.You can check online or call to see your balance.Again, you may want to list these assets in categories, like securities for stocks, bonds, and mutual fund holdings and a separate line for your life insurance policy.
Step 4: There are fixed assets.
The most difficult assets to liquidate are fixed assets.Fixed assets include your home, other properties, and vehicles.Any valuable collections, artwork, antiques, or other valuables are considered fixed assets.These are sometimes called large assets in the context of personal financial statements.The assets should be listed at their market value.
Step 5: Don't keep your assets the same.
Put the total value of all of your assets under the last asset category.To record the total value to the right, create a line for "Total Assets" on the left.To use the SUM function in excel, you need to type "SUM(" into the total assets value cell, select the cells containing your assets values, and then close the parentheses and press enter.The values should be summed up by the program.
Step 6: The second column should be called "abilities."
Underneath your "Total Assets" cell, type in "Liabilities" and skip a row.All of the amounts that you owe will be listed here.The amount owed should be listed.The most up-to-date information can be found in your bills or account statements.
Step 7: By type, tally your liabilities.
Take a look at the list of loan balances, credit, and bills you owe.Just like you did with your assets, separate out each category of liabilities and list their value to the right.You might include notes payable.Money is owed to an individual or business.Personal bank loans are outstanding.Unpaid bills.There are auto loan balances.There are mortgage balances.State and federal taxes are not paid.There are loans against your life insurance policy.There are credit card balances.
Step 8: It's time to sum up your debts.
"Total Liabilities" is a category on the left that you can type in when you've listed all of your liabilities.Put the added up value of your liabilities to the right.To make sure you didn't miscalculate the total or exclude any liabilities, double check your work.
Step 9: Subtract your assets from your liabilities.
Your net worth is the result.Next to the "Net Worth" cell, list this total.If you were forced to sell all of your assets and pay off your debts, your net worth is how much you would have left.
Step 10: There is a box labeled "Net Worth".
You should put this cell underneath your "Total Liabilities" cell.The net worth is the difference between what you own and the debt you owe.Business bankers look for this figure in entrepreneurs' personal financial statements.If your assets are equal to the sum of your liabilities and net worth, you have a balanced balance sheet.
Step 11: You can start your statement on a different sheet.
Your personal income statement is a record of your money coming and going over a period of time.This statement shows how much you make and where it goes.The income statement is similar to the balance sheet.Income and expenses are shown instead of assets and liabilities.The result of creating an income statement is your "net income," which shows your personal "profit" or loss for the period.Your income statement can show non-cash income, such as appreciation and returns on investment accounts.When reporting this type of income, follow the lender's specific requirements.
Step 12: There is a column called income.
Start by creating a category in the lefthand column on your income statement spreadsheet.All of your sources of income will be listed here.The amount of income received from each source will be listed to the right.You will probably have a category for your salary.The amount you earned from your primary occupation would be entered to the right of this cell.
Step 13: You can find your total income by all the sources.
The categories for your income will be based on how it was earned.All cash or value from the period will be included in this list.There is an extra cell for "Total Income" and the sum of your different incomes for the period at the bottom.You can change the list of income sources to suit your needs.There are tips andcommissions.Freelancing is self-employment income.Investment returns and income.There is interest income.There are distributions.Retirement income and pension distributions.There is child support and alimony.Social Security benefits.Other income.
Step 14: The sheet should have a second column called "expenses".
You can create a place for "expenses" under your "Total Income" cell.You can see your expenses in this column.Everything you paid for is included in your expenses.You can sum up your total expenses by leaving room for a "Total Expenses" cell at the bottom.Mortgage/rent payments might be included in your expenses.There are utilities.Car loan payments.Insurance premiums.Fees and investment contributions.Court-ordered payments include alimony or child support.Food.Discretionary spending includes entertainment, hobbies, meals out, etc.Medical expenses.There are other expenses.
Step 15: Take your total expenses and subtract them from your income.
The total is your net income.Immediately after the expenses column, write the total down.A positive net income means that you earned more than you spent, while a negative one means the opposite.If necessary, use your net income as a starting point.
Step 16: Analyze each column in both documents.
Financial statements can be used to assess the financial health of a business.The same applies to personal financial statements.You can compare your assets to your debts.Think about how you can increase or decrease your assets over time.You can find areas in your income statement where you can increase income or decrease expenses.Excess cash can be used to increase your assets or decrease your debts.
Step 17: You should work with a certified financial planning professional.
A CFP can help you create a neat and organized set of financial statements.Contact one with positive reviews if you search online for CFPs in your area.If questions arise during your sit-down with the CFP, keep your receipts and other statements ready.If you have any legal questions or concerns, it's a good idea to consult with a business organizations attorney when creating your personal financial statements.
Step 18: Prepare to meet with bankers
Personal financial statements can be used to apply for a loan.The bank can assess your financial situation with the statements.If you haven't already done so, you can create a neat copy of your personal financial statement snapshot by entering the figures into a spreadsheet application.Financial statements need to be clearly labeled and filled out.
Step 19: Wait for your bank to request the statement and then print, file and wait.
This is usually turned in with your loan application.If you are applying for a loan with a business partner, general partner or other large shareholder, they will need to create and submit their own personal financial statements.