How to Prepare a Personal Balance Sheet (Networth Statement)

A Personal balance sheet, also called a networth statement provides a summary of assets and liabilities that one has at a particular time.

It involves three steps:

Step 1: List Items of Value (Assets)

These include available cash and money in the bank accounts combined with other items of value such as a home, rental buildings, or a piece of land. Also include motor vehicles and other personal belongings such as furniture and home appliances etc.

Step 2: Determine Amounts Owed (Liabilities)

Liabilities are amounts you owe others but do not include items not yet due, such as next month's rent. List all your debt balances including personal loans, car loans, mortgages etc.

Step 3: Calculate Net Worth

A net worth is the difference between total assets and total liabilities and it provides a measurement of the current financial position.

Here are important things to note concerning your networth:

  • Net worth is the amount you would have if all assets were sold for the listed values and all debts were paid in full.
  • If the total value of assets is larger than the total value of liabilities, you will have a positive net worth. You may have a positive net worth and still have financial difficulties. Having many assets with low liquidity means not having the cash available to pay current expenses.
  • If the total value of liabilities is larger than the total value of assets, you will have negative net worth which means you are unable to pay debts when they are due.
  • Remember, your net worth is not money available for use but an indication of your financial position on a given date.

Before we go on to the next personal financial statement, i have provided for you some financial tools to help you prepare your your personal net worth statement.

Tools to Use

1. Personal Balance Sheet Worksheet: Download, print and use.(pdf file)

2. Net-Worth Statement Worksheets: Use these worksheets to prepare your personal balance sheets. (zip file)

When you are through, come back here and proceed to prepare your Personal Cashflow Statement.

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