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What Is a Personal Financial Statement?

What Is a Personal Financial Statement?

Your balance sheet is a proof of your assets compared to your liabilities. It gives you a real-time view of your financial standing by helping you evaluate your current financial situation. While it's beneficial for your financial health, your lender may ask for a personal financial statement when you apply for a loan.

A personal financial statement is your She knew everything minus your debts. You can create one yourself or seek advice from a financial adviser. Learn how personal financial statements work, and why they're important for evaluating the overall health of your finances.

What is a personal financial statement?

A personal financial statement (PFS) is a report that summarizes your personal financial status for one or more specific periods of time. It can help you monitor your spending, track your progress in meeting your financial goals, and identify areas where you may need to make changes.

The Personal Financial Statement Form (PFSF) is a standardized document used by many organizations to produce PFSs. The most important part of preparing an effective PFS is creating accurate and timely records. You should keep all of your important financial documents, such as bank statements, W-2s, pay stubs, and investment statements, in one place so you can easily access them when preparing your PFS.

To produce an effective PFS, it's important to understand the three main components: income/expenses; assets; and liabilities.

Definition and Examples of a Personal Financial Statement

A personal financial statement is a physical depiction of your personal wealth relative to your liabilities. It allows you to view your current financial situation in real time, and is of assistance for developing your wealth. Still, lenders may ask for a financial statement if you apply for financing.

But what are your assets and liabilities? Your assets include things like bank accounts, retirement accounts, investment accounts, real estate, and personal property with significant value, such as rare art collections, coin collections, antiques, and jewelry.

Your liabilities are all the financing you re obligated to repay. They may be mortgage payments, student loans, credit card debt, car loans, loans where you re the cosigner, unpaid taxes, and medical debt, and so on. If you have more financial assets than liabilities, it s a sign that you re building wealth.

If your liabilities exceed your assets, however, you have a net worth that's less than positive. This indicates that you may be living paycheck to paycheck or paying more than you earn, and that you could be viewed as a high-risk borrower to lenders.

If you are in a partnership or married and share assets, you and your partner can combine assets and liabilities to create a joint personal financial statement.

Suppose you have $200,000 worth of property. This entails your home, a bank account, and a retirement account. Now let us say you have $130,000 in liabilities. This consists of your mortgage, some student loans, and credit card debt. In this case, your net worth is $70,000.

What is on a personal financial statement?

A personal financial statement (PFS) is a report that summarizes an individual's income, assets, and debts. The PFS is used to help individuals plan their financial futures and make decisions about how to allocate their resources. A PFS can be created using a variety of accounting methods, including cash basis, accrual basis, or modified accrual basis.

The most important items on a PFS are an individual's gross income and expenses. Gross income is the total amount of money received from all sources during the reporting period. Expenses include both direct costs (such as mortgage payments) and indirect costs (such as healthcare premiums). Income and expenses are combined to calculate an individual's net worth. Net worth is the total value of an individual's assets minus the total value of his or her liabilities.

How Does a Personal Financial Statement Work?

Wealth is not contained in the quantity that you get, but by your net worth. A personal financial statement is important because it displays your net worth over time, assessing how well your retirement strategy is progressing. It gives a complete view of your finances so that you can see where you are coming from and where you need to go.

For example, suppose your financial goal is to retire early. You’ve officially paid off your debt (minus your mortgage), but you’re not that close to your goal of retiring early. You decide to create a personal financial statement to see where you stand.

The following example shows how you would fit your personal financial statement into the template.

Step 1: List All Your Assets

Most assets have an immediate value (i.e., you can look at your bank account to see what your balance is). But some assets such as your car, home, or an art collection may require an appraisal first.

If you don't know for sure, estimating may be enough. It may look like $600,000 in your home, $150,000 in your 401(k), and $125,000 in your investment account on your personal financial statement.

Step 2: List All Your Debt

Your liabilities are your debts. In this example, we stated that your debt other than your mortgage has been paid in full, so the only thing listed here is your mortgage. Your total liabilities are $300,000.

Step 3: Subtract the Two Numbers To Get Your Net Worth

In this example, subtracting your assets from your liabilities reveals your total net worth to be $650,000.

Suppose you know you need $1.2 million to escape duress and retire early. Your personal financial statement would show that you are currently $550,000 away from your goal. You could also update it next month to monitor your progress, and make modifications to your spending and saving as needed.

Components of a personal financial statement

A personal financial statement is a document that summarizes your personal finances for one or more periods of time. It includes items like your income, expenses, and net worth. A personal financial statement can be helpful in making decisions about your money and estate planning. There are several different components to a personal financial statement. The following are some of the most important:

1) Income: This section includes all of your earned income from sources like salaries, dividends, and interest payments. It also includes any social security benefits you may have received.

2) Expenses: This section covers all of your costs associated with maintaining your lifestyle, such as taxes, mortgage payments, and utility bills.

3) Net Worth: This section shows how much money you've saved or invested over the period covered by the personal financial statement.

How to create a personal financial statement

A personal financial statement (PFS) is a report that helps you understand your financial situation and make informed decisions about your money. To create a PFS, you'll need to gather information about your income, expenses, and assets. You can use the following four steps to create a PFS:

1. Assess your current financial situation. First, take stock of your current finances by listing all of your income and expenses for the past month or year. This includes both fixed costs and variable costs—such as rent or cable TV bills.

2. Identify your sources of income and expenses. Next, identify which of your incomes and expenses are fixed and which are variable. For example, if you're paid monthly wages, then your rent is probably a fixed expense while groceries are a variable expense.


A personal financial statement (PFS) is a summary of your income and expenses over a specific period of time. A PFS can help you determine whether you're on track to meet your goals and can provide insights into your spending habits.

There are a number of different ways to create a PFS, but the most important thing is to keep track of all your income and expenses. You can use a simple spreadsheet or tracking program, or you can write out everything by hand. The key is to be as detailed as possible so that you can understand where your money goes.

If you'd like to improve your financial situation, creating a PFS is an important first step. By tracking your spending, you can identify areas where you could cut back or save more money.

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