What It Means
A personal balance sheet, also called a net worthNet worthWhat you own minus what you owe: the value of your savings, investments, home and other assets, less your mortgage, loans and card balances. See more statement, is a snapshot of your finances on a single date. One column lists your assetsAssetsThings you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth. See more, what you own and what each is worth, and the other lists your liabilitiesLiabilitiesDebts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth. See more, what you still owe on each debt. Subtract the liabilities total from the assets total and the result is your net worth. A budgetBudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it. See more answers a different question, following the money that comes in and goes out over a month.
Try It: Fill In a Personal Balance Sheet
Fill in both sides with today's values. The example numbers are one couple's, so replace them with yours.
Positive net worth: you own more than you owe.
Negative net worth: you owe more than you own. Next year's sheet shows whether the gap is closing.
How It Sounds at Home
- "I redo our net worth statement every January."
- "The bank wanted a personal financial statement for the loan."
- "On paper we're fine, but most of it is the house."
The Breakdown
Worked example. A couple fills in their balance sheet on January 1:
| What they own | Value | What they owe | Balance |
|---|---|---|---|
| CheckingChecking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit. See more and savings | $6,500 | MortgageMortgageA loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term. See more | $250,000 |
| Brokerage account | $8,000 | Car loanCar loanAn installment loan used to buy a vehicle, repaid in monthly payments over a set term, with the vehicle as collateral. See more | $9,000 |
| Retirement accounts | $42,000 | Student loanStudent loanMoney borrowed to pay for college or career school, repaid with interest after you leave school; it comes from the federal government or a private lender. See more | $18,000 |
| Home, at a likely sale price | $310,000 | Credit card | $2,500 |
| Car, at a likely sale price | $14,000 | ||
| Total assets | $380,500 | Total liabilities | $279,500 |
Net worth: $380,500 minus $279,500 = $101,000.
What the result means. One sheet is a reading on one day, and it gets useful next to the one before it. If next January shows the mortgage and car loan $12,000 lower and the retirement accounts $6,000 higher, with nothing else changed, net worth has grown by $18,000. The sheet also shows the mix: only $6,500 of this couple's $380,500 is cash they could spend this week.
How to build one
- Pick a date and use balances from that day for everything.
- List every account, investment and piece of valuable property, with a realistic current value.
- On the other side, write down every debt at its current payoff balance.
- Total each side and subtract.
- Save it, and make the next one on the same date.
Good to Know
Investor.gov, the U.S. Securities and Exchange Commission's site for investors, suggests setting what you own beside what you owe and subtracting to find where you stand. University of Minnesota Extension describes a balance sheet as a snapshot of your finances at a point in time and recommends reviewing net worth regularly, such as once a year, to track progress. Use a sale price you could realistically get for a home or car, since an optimistic guess inflates the whole sheet, and keep the retirement line honest about the tax you'd owe to reach it early.
FAQ
What goes on a personal balance sheet?
Assets such as cash, investments, retirement accounts, a home and a car on one side, and liabilities such as a mortgage, loans and credit card balances on the other. The difference between the two totals is your net worth.
How often should I update my personal balance sheet?
Once a year on the same date is a steady rhythm, and University of Minnesota Extension suggests regular reviews such as annually. Redo it sooner after a big change, such as buying a home or paying off a loan.
Is a personal balance sheet the same as a budget?
They answer different questions. A balance sheet shows what you own and owe on a single day, while a budget follows money in and out over a month, and the saving a budget makes room for shows up later as a higher net worth.
Do It in Buhata
Accounts and Vault
Keep your bank balances in Accounts in Buhata and your home, car and other valuables in Vault, a Plus tool, then total both sides on the same date each year.
Open BuhataRelated Terms and Categories
- Assets
Things you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth.
- Liabilities
Debts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth.
- Net worth
What you own minus what you owe: the value of your savings, investments, home and other assets, less your mortgage, loans and card balances.
- Illiquid assets
Things you own that can't be turned into cash quickly without a wait, a cost or a lower price, such as a home, other real estate or collectibles.
- Budget
A plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it.
Sources
Investor.gov (U.S. Securities and Exchange Commission), "Figure Out Your Finances"; Fidelity, "Net worth: What it is and how to calculate it"; University of Minnesota Extension, "Balance sheet"; University of Minnesota Extension, "Consider your total financial picture"; FINRA, "Statement of Financial Condition" (sample personal financial statement)
- www.investor.gov/introduction-investing/investing-basics/save-and-invest/figure-out-your-finances
- www.fidelity.com/learning-center/smart-money/net-worth
- extension.umn.edu/farm-finance/balance-sheet
- extension.umn.edu/adjusting-income-loss/making-most-what-you-have
- www.finra.org/sites/default/files/2020-04/sample_financial_statement.pdf
Last updated .