Personal Financial Statement

What it is

A personal financial statement is a snapshot of an individual’s financial position at a specific point in time. It lists assets and liabilities and shows net worth (assets minus liabilities). It’s useful for tracking progress toward financial goals and is often requested by lenders when applying for credit.

Key takeaways

• Lists all assets and liabilities to calculate net worth.
• Net worth = assets − liabilities; it can be positive or negative and changes over time.
• Useful for personal financial planning and for loan or mortgage applications.
• Income and expenses are usually tracked separately on a personal income statement.

Components

Assets
* Cash and cash equivalents (checking, savings)
* Investments (brokerage, retirement accounts)
* Real estate (market value of owned property)
* Vehicles and other valuable, verifiable personal property (e.g., appraised jewelry, collectibles)
* Any other owned items with realizable value

Liabilities
* Mortgages
* Auto loans
* Student loans
* Credit card balances
* Unpaid taxes
* Any debt you are legally responsible for (including loans you cosigned or personally guaranteed)

How it works

1. List current values for all assets.
2. List outstanding balances for all liabilities.
3. Subtract total liabilities from total assets to determine net worth.
4. Update periodically to monitor trends and make informed financial decisions.

Special considerations

• Joint accounts and jointly held debts: Include debts that you are legally responsible for even if they are shared. Married couples can create a combined statement.
• Business assets and liabilities: Exclude business-related items unless you are personally liable (for example, you personally guaranteed a business loan).
• Rented items: Do not include items you rent because you don’t own them.
• Personal property: Routine household items (furniture, small appliances) are typically excluded because they aren’t easily liquidated. High-value items may be included if verifiable by appraisal.
• Lenders also consider credit history and other factors; a positive net worth does not guarantee loan approval.

Example

River’s personal financial statement (illustrative)
* Assets: car $20,000; house $200,000; investments $300,000; cash $50,000; collectibles $20,000 → Total assets $590,000
* Liabilities: car loan $5,000; mortgage $50,000; cosigned loan $10,000 → Total liabilities $65,000
* Net worth: $590,000 − $65,000 = $525,000

Using this statement, River can track progress toward retirement and provide a clear summary if applying for credit.

Personal income statement

Income and expenses are generally recorded on a separate personal income statement, typically expressed monthly or annually. The difference between income and expenses is net cash flow, which helps assess ongoing affordability and savings capacity.

Frequently asked questions

Am I responsible for my spouse’s debt if I didn’t sign for it?
* No—you must have signed the loan or credit agreement to be legally liable. Jointly held assets or debts you signed for should be included on your statement. Rules can vary by jurisdiction (for example, community property states), so check local law for specifics.

Can I have too many credit cards?
* The number of cards isn’t the primary issue. Lenders focus on balances, payment history, credit utilization, and overall debt levels. High balances or missed payments hurt creditworthiness and can reduce net worth.

Conclusion

A personal financial statement is a practical, easy-to-maintain tool for understanding net worth, tracking financial progress, and supporting credit applications. Keep it current and pair it with a personal income statement to get a complete view of your financial health.