Personal financial balance sheet
Personal financial statements are the result of gathering information about your assets (what you have) and liabilities (what you must pay). A personal balance sheet shows how much money you have (assets minus liabilities) at the time of the statement. Creating an “assets - liabilities” chart is the most effective way to help you realize where you are, and how far away you are from reaching your desired financial goals.
A personal balance sheet consists of two main parts: Assets and Liabilities. The net asset is the value of all assets, minus the total of all liabilities.
ASSETS
Activity Make a list of assets
LIABILITIES
Activity Make a summary of all liabilities
9 Financial assets are liquid and paper assets such as bank deposits, bonds, and stocks. (According to FSB)
NET ASSETS
The purpose of making a personal balance sheet is to see the whole picture of your personal asset situation in the clearest and most accurate way. The net here is the difference between your assets and liabilities. In a nutshell, your net worth is the difference between what you own and what you owe. If your assets exceed your liabilities, you have a positive net worth. Conversely, if your liabilities are greater than your assets, you have a negative net worth.
Activity: Make a balance sheet of your personal assets
Note that your net worth will fluctuate (not daily) and the overall trend has to rise over the long term. The net worth calculation can provide a warning if you're completely off track, or a “well done” confirmation if you're doing well. When
you know what your financial situation is like, you’ll be more mindful of your spending, better prepared to make the right financial decisions, and have a chance of achieving your short-term and long-term financial goals.