what is a personal financial statement 
the term personal financial statement refers to a document or spreadsheet that outlines an individual s financial position at a given point in time the statement typically includes general information about the individual such as name and address along with a breakdown of total assets and liabilities the statement can help individuals track their financial goals and wealth and can be used when they apply for credit understanding the personal financial statementfinancial statements can be prepared for either companies or individuals an individual s financial statement is referred to as a personal financial statement and is a simpler version of corporate statements both are tools that can show the financial health of the subject a personal financial statement shows the individual s net worth their assets minus their liabilities which reflects what that person has in cash if they sell all their assets and pay off all their debts if their liabilities are greater than their assets the financial statement indicates a negative net worth if the individual has more assets than liabilities they end up with a positive net worth keeping an updated personal financial statement allows an individual to track how their financial health improves or deteriorates over time these can be invaluable tools when consumers want to change their financial situation or apply for credit such as a loan or a mortgage knowing where they stand financially allows consumers to avoid unnecessary inquiries on their credit reports and the hassles of declined credit applications the statement allows also credit officers to easily gain perspective into the applicant s financial situation in order to make an informed credit decision in many cases the individual or couple may be asked to provide a personal guarantee for part of the loan or they may be required to put up collateral to secure the loan special considerationsa personal financial statement is broken down into assets and liabilities assets include the value of securities and funds held in checking or savings accounts retirement account balances trading accounts and real estate liabilities include any debts the individual may have including personal loans credit cards student loans unpaid taxes and mortgages 1 debts that are jointly owned are also included married couples may create joint personal financial statements by combining their assets and liabilities income and expenses are also included if the statement is used to attain credit or to show someone s overall financial position this can be tracked on a separate sheet or an addendum called the income statement this includes all forms of income and expenses typically expressed in the form of monthly or yearly amounts the following items are not included in a personal financial statement business liabilities are only included in a personal financial statement if an individual provides the creditor with a personal guarantee keep in mind your credit report and credit history are big considerations when it comes to getting new credit and every lender has different requirements for issuing credit so even if you have a positive net worth more assets than liabilities you may still be refused a loan or credit card if you haven t paid your previous debts on time or have too many inquiries on file 2example of a personal financial statementlet s assume that river wants to track their net worth as they move toward retirement they have been paying off debts saving money investing and are getting closer to owning their home each year they update the statement to see the progress they have made here s how they would break it down they would list all their assets 20 000 for a car 200 000 for their house 300 000 in investments and 50 000 in cash and equivalents they also own some highly collectible stamps and art valued at 20 000 that they can list their total assets are therefore 590 000 as for liabilities river owes 5 000 on the car and 50 000 for their house although river makes all of their purchases with a credit card they pay the balance off each month and never carry a balance river cosigned a loan for their daughter and 10 000 remains on that even though it is not river s loan they are still responsible so it is included in the statement river s liabilities are 65 000 