How to Create A Personal Balance Sheet in this, The best ways to know all about or collect all information about your finances is by making a personal balance sheet. We do understand this might be a confusing task with no proper knowledge of doing so. But, yes a personal balance sheet will clear all your doubts and confusion by presenting you with a clear picture of your financial situation. So let us understand more about personal balance sheet as well as their related terms such as personal balance sheet definition, what is a personal balance sheet, creating a personal balance sheet, etc.
What is a balance sheet?
A balance sheet is known to be a financial statement that depicts all of the company’s liabilities as well as shareholder equity from its total assets. Thus, the balance sheet tells us about the internal and external affairs of the company, how well is the company performing.
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So, the equation representation of the balance sheet is as follows:
- Balance Sheet = Assets + Liabilities
OR
- Assets = Liabilities + Shareholders’ Equity
What is a personal balance sheet?
A personal balance sheet is the same as the normal balance sheet which depicts all of the company’s liabilities as well as shareholder equity from its total assets or says tells you about assets vs liabilities. So, the personal balance sheet definition tells you about your personal financial health by including all your assets and liabilities. Thus, it is a list of everything you own as well as tells you where all of your money is and how much you owe, and your debts.
How to make a personal balance sheet?
To create a personal balance sheet you need to follow some basic steps and analyze few specific things too. So let’s create a personal balance sheet.
- Step 1: Decide the Reporting Date and the Period of personal balance sheet
- Step 2: Make a list of your Assets
- Step 3: Make a list of your Debts or liabilities
- Step 4: Calculate Shareholders’ Equity
- Step 5: Add Total Liabilities to Total Shareholders’ Equity
- Step 6: Compare the Total Liabilities to Total Shareholders’ Equity with Assets total
- Step 7: Examine your balance sheet.
Now, discuss these steps involved in creating a personal balance sheet in detail.
Step 1
Decide the Reporting Date and the Period of personal balance sheet
A personal finance sheet should show the total assets, liabilities, as well as the company’s shareholders’ equity on a particular date which we called as the reporting date. Most probably in most of cases, the reporting date is the final date or day of the reporting period.
On quarterly basis
In case the companies report quarterly, then the reporting date will fall out in the final day of the quarter as follows:
- Q 1: March 31
- Q 2: June 30
- Q 3: September 30
- Q 4: December 31
On annual basis
Companies reporting on an annual basis mostly have December 31st as their reporting date, but they are free to choose any date in the financial year.
Step 2
Create a list of your Assets
After analyzing the reporting date next step is to list down all the assets you have or the company is holding. For this purpose, you can also categorize the assets based on current and noncurrent assets too or specify them based on your own by category. Some of the assets are as follows:
-
Classification of assets based on your own by category
Immediate access
- Savings account
- Checking account
- Non-retirement investments / brokerage account
- Revocable Trust
Retirement accounts
- Employer retirement accounts – 401k, 403b, 457
- IRA – Traditional, Rollover, Roth, SEP
- Pension / Profit-sharing plan
Accounts for kids
- 529 plan
- Educational IRA
- Custodial accounts
Business ownership
- Company stock
- Ownership stake in your business or another
- Private equity
Real estate
- Primary residence
- Vacation property
- Investment property
Complicated assets
- Cash-value life insurance
- Irrevocable trust (if you’re the beneficiary)
- Inherited IRA
- Collectibles of value
-
Classification of assets on basis of current assets and non current assets
Current Assets
- Cash and cash equivalents
- Short-term marketable securities
- Accounts receivable
- Inventory
- Other current assets
Noncurrent Assets
- Long-term marketable securities
- Property
- Goodwill
- Intangible assets
- Other noncurrent assets
Note: Current and noncurrent assets or all the categories should be totaled by adding them up to get the total assets.
personal balance sheet example of assets
Here we have represented personal balance sheet format of assets.
| Liabilities | |
|---|---|
| Cash | 4000 |
| Gold coins | 5000 |
| Health savings account | 20000 |
| Investments | |
| IRA | 5200 |
| 401 K | 3900 |
| Robin hood account | 4500 |
| Property | |
| TX rental property | 2500 |
| CA rental property | 3500 |
| Honda city | 4000 |
| Assets Total | $ 49,000 |
Step 3
Make a list of your Debts or liabilities
As you have listed down all the assets you own similarly you also need to list down all your debts and liabilities. Some of the liabilities, or debts as well as the interest rate on some of these debts are as follows, which is depicted under general liabilities and debts and by classifying them as current liabilities and non-current liabilities:
-
Classification as general liabilities and debts:
- Credit card balances
- Past due bills
- Back taxes owed to IRS
- Auto loan (or future lease payments added up).
- Federal student loans (Stafford, grad plus, parent plus)
- Private student loans
- Personal loans payable to a bank or to the financial institution
- Funded acquisitions (such as furniture, applications, electronics, cell phone)
- Line of credit
- Money owed to family or friends
- Property loans
- Mortgage
- Home equity loan
- HELOC (home equity line of credit)
-
Classification as current liabilities and non current liabilities
Current Liabilities:
- Accounts payable
- Accrued expenses
- Deferred revenue
- Commercial paper
- Current portion of long-term debt
- Other Current Liabilities
Noncurrent Liabilities
- Deferred revenue (noncurrent)
- Long-term lease obligations
- Long-term debt
- Other noncurrent liabilities
Personal balance sheet example of Liabilities
Here we have represented personal balance sheet format of liabilities.
| Liabilities | Amount (in $) |
|---|---|
| Short term Liabilities | |
| Principal loan | 4500 |
| TX property mortgage | 5500 |
| CA rental property | 6500 |
| Long term Liabilities | |
| Student loan principal | 10,000 |
| TX property mortgage | 5800 |
| CA rental property | 5200 |
| Liabilities Total | $ 49,000 |
Step 4
Calculate Shareholders’ Equity
After noting down all your assets and liabilities now you need to calculate all the Shareholders’ Equity a company or organization has. So, some of the common sections of shareholder’s equity include:
- Common stock
- Preferred stock
- Treasury stock
- Retained earnings
Step 5
Add Total Liabilities to Total Shareholders’ Equity
Total Shareholders’ Equity is included under the liabilities side of the balance sheet and merged into the total of liabilities. So, we will as Total Shareholders’ Equity to the liabilities.
Step 6
Compare the Total Liabilities to Total Shareholders’ Equity with Assets total
Now, as we have got all the assets and liabilities information. So, we will equate total assets against total liabilities plus equity.
- As, Balance sheet = total assets = total liabilities + equity
Step 7
Examine your balance sheet
You need to Investigate your balance sheet and check if the total of assets matches the total of liabilities. As well as check the financial health of your business or your personal self by using an individual personal balance sheet.
Sample personal balance sheet
Here, we have presented a sample personal balance sheet or example of a personal balance sheet depicting Total Liabilities to Total Shareholders’ Equity and total Assets. This balance sheet template also depicts the personal balance sheet format or way to present assets and liabilities in the balance sheet.
| Assets | 2020 | |
|---|---|---|
| Current Assets | ||
| Cash | 11,874 | |
| Accounts receivable | --- | |
| Inventory | --- | |
| Prepaid expenses | --- | |
| Short-term investments | --- | |
| Total current assets | $ 11,874 | |
| Fixed (Long-Term) Assets | ||
| Long-term investments | 1,208 | |
| Property, plant, and equipment | 15,340 | |
| (Less accumulated depreciation) | (2,200) | |
| Intangible assets | --- | |
| Total fixed assets | $ 14,348 | |
| Other Assets | ||
| Deferred income tax | --- | |
| Other | --- | |
| Total Other Assets | --- | |
| Total Assets | $ 26,222 |
Liabilities and Owner’s Equity
| Current Liabilities | ||
|---|---|---|
| Accounts payable | $ 8,060 | |
| Short-term loans | --- | |
| Income taxes payable | $ 3,145 | |
| Accrued salaries and wages | --- | |
| Unearned revenue | --- | |
| Current portion of long-term debt | --- | |
| Total current liabilities | $ 11,205 | |
| Long-Term Liabilities | ||
| Long-term debt | $ 3,450 | |
| Deferred income tax | ||
| Other | ||
| Total long-term liabilities | $ 3,450 | |
| Owner's Equity | ||
| Owner's investment | ||
| Retained earnings | $ 7,178 | |
| Retained earnings | $ 4,389 | |
| Other | ||
| Total owner's equity | $ 11,567 | |
| Total Liabilities and Owner's Equity | $ 26,222 |
Personal balance sheet excel
You can also show the personal finance balance sheet in excel. So, here we represent below the personal balance sheet template excel which shows the total assets with total liabilities and shareholder’s equity.
| Assets | 2020 | |
|---|---|---|
| Current Assets | ||
| Cash | $11,874 | |
| Accounts receivable | -- | |
| Inventory | -- | |
| Prepaid expenses | -- | |
| Short term investments | -- | |
| Total current assets | $ 11,874 | |
| Fixed (Long-Term) Assets | ||
| Long term investments | $ 1,208 | |
| Property, plant, and equipment | $ 15,340 | |
| (Less accumulated depreciation) | $ (2,200) | |
| Intangible assets | --- | |
| Total fixed assets | $ 14,348 | |
| Other Assets | ||
| Deferred income tax | --- | |
| Other | --- | |
| Total Other Assets | --- | |
| Total Assets | $ 26,222 |
Liabilities and Owner’s Equity
| Current Liabilities | ||
|---|---|---|
| Accounts payable | $ 8,060 | |
| Short-term loans | ||
| Income taxes payable | $ 3,145 | |
| Accrued salaries and wages | ||
| Unearned revenue | ||
| Current portion of long-term debt | ||
| Total current liabilities | $ 11,205 | |
| Long-Term Liabilities | ||
| Long-term debt | $ 3,450 | |
| Deferred income tax | ||
| Other | ||
| Total long-term liabilities | $ 3,450 | |
| Owner's Equity | ||
| Owner's investment | $ 7,178 | |
| Retained earnings | $ 4,389 | |
| Other | ||
| Total owner's equity | $ 11,567 | |
| Total Liabilities and Owner's Equity | $ 26,222 |
Frequently Asked Questions related to personal balance sheet
-
How do you create a personal balance sheet?
For creating a personal balance sheet you need to follow the following steps as:
Step 1: Decide the Reporting Date and the Period of personal balance sheet
Step 2: Make a list of your Assets
Step 3: Make a list of your Debts or liabilities
Step 4: Calculate Shareholders’ Equity
Step 5: Add Total Liabilities to Total Shareholders’ Equity
Step 6: Compare the Total Liabilities to Total Shareholders’ Equity with Assets total
Step 7: Examine your balance sheet.
-
What is a personal financial statement example?
A personal financial statement example includes a balance sheet depicting assets and liabilities as well as shareholder’s equity.
-
What are the value of personal financial statements?
The individual’s net worth is depicted in personal financial statements that consist of assets and liabilities as well as shareholder’s equity values.
-
What are the 5 types of financial statements?
The 5 types of financial statements include the following:
- An Income Statement
- A Statement of Changes in Equity
- A Balance Sheet
- A Statement of Cash Flows and
- Notes to Financial Statements.
-
How do you list personal assets and liabilities?
You can list your assets as follows:
Current Assets:
- Cash and cash equivalents
- Short-term marketable securities
- Accounts receivable
- Inventory
- Other current assets
Noncurrent Assets:
- Long-term marketable securities
- Property
- Goodwill
- Intangible assets
- Other noncurrent assets
And you can list your liabilities as follows:
Current Liabilities:
- Accounts payable
- Accrued expenses
- Deferred revenue
- Commercial paper
- Current portion of long-term debt
- Other Current Liabilities
Noncurrent Liabilities:
- Deferred revenue (noncurrent)
- Long-term lease obligations
- Long-term debt
- Other noncurrent liabilities
-
What are examples of personal assets?
Some of the examples of personal assets include:
- Cash and cash equivalents
- Property or land
- certificates of deposit
- savings accounts
- money market accounts
- physical cash
- Treasury bills
Conclusion
Personal Balance sheet offers a quick view of the financial health of the individual. A personal balance sheet is the same as the normal balance sheet which depicts all of the company’s liabilities as well as shareholder equity from its total assets. So, here in the above article, we have summed up for you the basics steps involved in creating a personal balance sheet as well as excel personal balance sheet template and personal balance sheet examples.
