If you want to get an idea of where you stand financially, or if you are considering a life change that will affect your finances, a personal finance statement is a good idea.If you want to start your own business, change careers, retire or travel the world, you will need a personal finance statement.A balance sheet and income statement can be used to prepare a personal finance statement.
Step 1: Decide what format works best for you.
The majority of people prefer to use a spreadsheet program.If you aren't good with computers, use a piece of paper and a pencil.If you are the only one who will see it, a handwritten finance statement is fine.If you want to prepare a personal financial statement, consider a software program such as Microsoft Money.
Step 2: A balance sheet is created.
A balance sheet will show you how much you own and what you owe, giving you an idea of your net worth.Assets can be included in a column on the left.Bank account balances, the amount of money in stocks, and the value of property will be included.There is a column on the right that has your liabilities in it.Liabilities include your mortgage, credit card debt and other loans.You should total the amount of your assets and liabilities.You will have a snapshot of your net worth if you subtract your liabilities from your assets.
Step 3: You can create an income statement.
How much money you earned and how much you spent will be shown in this part of your financial statement.Take all of your income, including salaries, bonuses, rental and business income.Add up all of your expenses, including rent, utilities, fees and other regularly occurring bills.There is a section for extraordinary occurrences of income or expenses that don't happen on a regular basis.A large tax payment, a sizeable bonus or an expensive home repair can throw off your income statement.You have an idea of your net income if you tally the difference between your income and expenses.
Step 4: Your personal finance statement needs to be updated regularly.
You could want to do it every month.You can use this to monitor your finances.
Step 5: There should be a narrative with the numbers.
This will help you remember what was happening.Provide a brief description of any special expenses, or note how you calculated some sums, such as the value of your home.
Step 6: Work with a financial advisor.
To see if you missed anything, ask a professional to review your personal finance statement.