A personal financial statement is a form or spreadsheet detailing a person's financial state at a certain point in time. It may be requested by financial institutions or investors if you're looking to take out a loan or secure an investment. It details income; the financial worth of stocks, bonds, annuities, mutual funds, and life insurance; and values certain assets. A total of all assets is provided at the bottom. It's important to note that although there is a total of the value of all assets, not all of what is listed is necessarily accessible. By clicking the green button, you can fill out and print a blank personal financial statement template.
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A personal financial statement is used by individuals who would like to take a closer look at their financial health. This statement is typically used to demonstrate a party's creditworthiness or financial stability. This can help them get approved for financing or loans, such as an auto loan, credit cards, or mortgage. It is similar to a credit report.
A sample personal financial statement is available at the bottom of this page.
A personal financial statement can be used by anyone who wants to get a clear grasp of their financial status. Often, though, an aspiring entrepreneur draws up a personal financial statement to try to get a loan or win over an investor.
Once a business is up and running, it becomes enough of an entity to merit its financial statement. An established business entity will have its assets and liabilities and will have enough history to create a profit & loss (P&L) statement.
However, when a business is just starting, it has no financial history and therefore nothing to base a statement on. Investors and creditors only have the financial integrity of the entrepreneur to go on. Therefore, until your business has seen enough success to have a financial identity of its own, you will be issuing personal financial statements.
A personal financial statement should contain the following basic elements:
Personal information – This means your full legal name, address, telephone number, and any other contact information you’d like to share. This personal information is used to identify who the personal financial statement is for. If you’re an entrepreneur trying to get a loan or investment, you may also want to include the name of your business.
A balance sheet, or “statement of financial position” – This lists your assets and liabilities and calculates your “net worth” by subtracting the number of your liabilities from the number of your assets.
For example, if you have $100,000 in assets and $65,000 worth of liabilities, your net worth would be $35,000.
You’ll need to do a bit of research to accurately complete this portion of your financial statement because the valuable property must be appraised. You must also pull your credit report and check the status of all your unpaid debts.
Below is an appendix in which you provide details about each of the assets and liabilities listed on your balance sheet. This is also the place to describe any miscellaneous liabilities or personal income.
Listing your assets is an important part of your balance sheet. Assets include, but may not be limited to:
Accessible cash – This includes all of your checking account balances and any cash on hand.
The balance of all savings accounts.
The total balance of any retirement accounts you have This should include your IRA.
Accounts and notes receivable - These are debts or payments that are personally owed to you.
The market value of any significant assets - Significant assets may include but are not limited to, automobiles, real estate, life insurance policies, real property, jewelry, and firearms.
Real Estate – Name each piece of real estate and personal property that you own. Specify what type of property it is, the date it was purchased, and its original cost and present market value. You should also include the name and address of each mortgage holder (even if it’s you), each mortgage account number, the balance and status of each mortgage, as well as the amount of money paid against each mortgage every month or year.
Life insurance – List beneficiaries, insurance company details, and the face amount and cash surrender value of each policy.
Your liabilities must also be accurate so that calculating your net worth is accurate. To properly list your liabilities, including the following information:
The total sum of all unpaid accounts. Create an itemized list of all unpaid accounts. Be sure to specify the sum due and to double-check your numbers and your total.
Money owed to institutions – This includes money you owe to a bank, credit union, or any institution that loaned money to you.
Unpaid installment accounts – This part can be a bit confusing. Ordinarily, you list two of these: one for auto payments and one for any other payments made in installments. Mortgage payments should NOT be included here, they should be listed separately.
Life insurance loan, if applicable.
Total real estate mortgage owed, if applicable.
Unpaid taxes - This is specifically referencing back taxes and not estimates or paid for which payments haven’t posted do not apply.
Contingent Liabilities – These are kept separate from normal liabilities because they are, in a sense, not your sole responsibility. List any liabilities you have accrued through endorsement or co-creation of, say, a business, as well as any other special debts such as legal claims or responsibilities and income tax provisions on the federal level.
Notes Payable to Banks and Others – In this section, list the names and addresses of institutions or individuals to whom you owe money (the “Noteholders”), as well as original debts, current remaining debts, child support, and the amounts and frequencies of payment installments.
The total sum of all liabilities. Remember, this number must be accurate because you’ll subtract it from your assets to calculate your net worth.
Your financial statement should include the source of your income. This description can be general. Include your salary, net investment income, real estate income, and any other income you receive. If you have miscellaneous income, be sure to provide details about it.
You should sign and date your financial statement. Before you sign and date it, provide a statement verifying the information preceding, followed by your signature, your printed legal name, your social security number, and the date of signing.
To create a personal financial statement, follow these simple steps:
Create a spreadsheet that has a section for assets and one for liabilities. You can choose to list liabilities and then assets or assets and then liabilities. You’ll need another section or cell of a spreadsheet that will show your calculated net worth.
List your assets and their worth. Remember that it isn’t considered an asset unless you own it. It does not include a home or apartment you’re renting or other minor and not highly valued items. Common assets include owned real estate, mineral rights, riparian rights, oil and gas rights, checking and savings account balances, the value of stocks or annuities, the balance of retirement accounts, and valuable assets such as fine art or rare coins. List each asset in its cell. In the cell next to the asset, place the dollar value of the item.
List every liability as well as its worth. A liability is something on which you owe money or on which you are a cosigner. Examples of liabilities include balances on personal loans, credit card balances, small claims or other court judgments against you, and unpaid state or federal taxes. Name each liability and then in the cell next to it, including the balance.
Determine the total of both assets and liabilities. If you’re using Excel, you can highlight the row that lists the dollar amount of each asset and use the total formula. The same can be done for the liabilities. The total of each should be listed directly underneath their corresponding category. For example, $411,000 in total assets and $125,000 in total liabilities.
Determine your net worth. To calculate your net worth first create a net worth total cell. Then, in the cell next to it, subtract the total amount of your liabilities from your total amount of assets. Using the previous example, the net worth would be $286,000.
Depending on the reason you’re creating the personal financial statement, you may also want to include sources of income. This is most commonly done if the personal financial statement is requested because you’re applying for a business loan and will also be providing a personal guarantee for the loan.
A personal financial statement template, or PFS, involves fewer legal considerations than a corporate document. However, because the goal of the document is to create an accurate picture of your financial health, it’s important to make the process just as seriously as you would if you needed to put together any other legal document.
Auditing happens when the IRS or even a court decides they want you to turn over your financial documents because they believe you’re lying about your financial circumstances or hiding money.
Being audited is stressful. You may end up hiring an attorney or an accountant to help you, which is an added expense you’ll face. Financial dishonesty can also cause you to face civil or criminal charges which can result in fines or even jail time. You could even be forced by the court or the IRS to stop your business operations.
According to the Small Business Administration’s guidelines, personal financial statements must be completed for every proprietor, every general partner, every limited partner who owns 20% or more of the business, every stockholder holding at least 20% of voting stock, and every loan guarantor.
Drawing up personal financial statements for each of these parties may seem like a lot of work, but it’s a whole lot easier if you use a simple personal financial statement. Using a template makes the process faster and ensures all your financial statements have the same format.
Personal finance refers to how you handle your money. It includes all of the decisions and activities related to your finances. Some of the most important elements of personal finance are:
Staying on Budget
Managing Debt
Retirement planning
Sticking to a predetermined budget is another essential feature of financial responsibility. Here are some tips to help you do just that:
Set a personal budget with specific financial goals. Don’t budget arbitrarily. Instead, design a budget that charts a course to the financial future you desire.
Cash for currency: when it comes to discretionary spending, the best way to stick to a budget is to withdraw a set amount of cash at the start of each week and make sure you pay for all of your discretionary items with that cash. Having actual money on you at all times will give you a constant reminder of what you can and cannot spend.
Think of spending in terms of your hourly wage: when considering a large purchase, make your decision based not simply on dollars and cents, but on hours-labored to earn the requisite cash. Is the item worth all that work? If so, buy it; if not, don’t. Salaried Workers: to compute your hourly wage, simply divide your monthly check by 160, or bi-monthly check by 80.
Budget by “percentage rules”:
Allot 50% of your income for necessities (rent/mortgage, utilities, groceries, healthcare, car payment, etc.).
Allot 30% for lifestyle (anything that isn’t essential--e.g. Gym membership, restaurants, entertainment, etc.)
Allot 20% for savings (e.g. paying off debt, emergency savings, retirement, etc.)
Prioritize creating an emergency safety net: we highly recommend that you have an emergency savings account with six months of your expenses. Using the percentage rules outlined above, if roughly 50% of your income covers your necessities, your emergency safety net should amount to roughly three months salary (6 months x necessities budget (i.e. 50% monthly salary)
Once you have saved the money required, consider putting it in a separate account and don’t touch it. That way, if the unforeseen happens and your income disappears, you have six months of expenses set aside to tide you over as you plan your financial future.
Many are also dealing with debts from a variety of sources--mortgage, student loans, credit cards, etc. Here are some tips to help you pay down your debts as efficiently as possible:
Pay off little debts to free up cash to help you pay off big debts.
Don’t co-sign loans: co-signing can be detrimental to your finances and can strain the relationship with whomever you are co-signing for.
If you are a student, fill out a FAFSA regardless of whether or not you think you are eligible for financial aid. Financial aid is an umbrella term for a wide range of benefits, don’t assume that your or your parents’ income alone determines eligibility.
If you are considering purchasing a home, try to keep your mortgage payments below 30% of your gross monthly income. Below 28%, is even better.
Start saving early and as much as possible.
Take advantage of any employer-match programs. The most common of these are 401Ks. Many employers match, up to a certain amount, of employee contributions to their 401k. This is essentially free money that, if taken advantage of, will significantly increase your savings potential and retirement fund.
Avoid cashing out early at all costs. Doing so comes with punitive penalties and taxes.
Numerous financial tools will help you to organize your finances better. We have selected a few of our favorite resources for you to check out below:
Bill of Sale: A bill of sale is a document that recognizes the sale of an item from one party to another.
Business Plan: A business plan is a document that defines the financial aspirations and obligations of potential business.
Loan Agreement: A loan agreement is a written document that details the approved financial arrangement between a lender and a loan recipient.
Promissory Note: A promissory note is a document that certifies the guarantee of a borrower to repay a loan in full by a promised date.
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