Home Economics How to Create A Personal Balance Sheet? 3 Easy Steps

How to Create A Personal Balance Sheet? 3 Easy Steps

by Altaf
How to Create A Personal Balance Sheet 3 Easy Steps

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 a clear picture of your financial situation. So Let us understand more about personal balance sheet as well as its related terms such as personal balance sheet definition, what is a personal balance sheet, creating a personal balance sheet, etc.

personal balance sheet definition

What is a balance sheet?

A balance sheet is known to be as 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 say 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.

personal balance sheet

How to make a personal balance sheet?

To create a personal balance sheet you need to follow some basic steps and analyse 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 the 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 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 analysing 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 categorise the assets based on current and non current 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 totalled 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 coins5000
Health savings account20000
Investments
IRA5200
401 K3900
Robin hood account4500
Property
TX rental property2500
CA rental property3500
Honda city4000
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 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.

LiabilitiesAmount (in $)
Short term Liabilities
Principal loan4500
TX property mortgage5500
CA rental property6500
Long term Liabilities
Student loan principal10,000
TX property mortgage5800
CA rental property5200
Liabilities Total$ 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 total of liabilities. As well as check the financial health of your business or your personal self by using 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 consists 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 as:

  • 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 includes:

  • 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.

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