Personal Finance

Why You Need a Personal Financial Statement

Working towards your future? Start with a personal financial statement

Do you know your net worth? Do you have a goal for your net worth in mind? If you answered “no” to either of those questions, a personal financial statement might be in order. These statements outline an individual's assets and liabilities to reveal their net worth, and also makes it easier to track your assets and worth over time.

Keeping a personal financial statement isn’t just an important exercise for maintaining a healthy bank account. You may need these records when making investments or working with banks to show you’re financially sound. Read on for more details about personal financial statements to see if it’s right for you and how to go about creating one.

What is a personal financial statement?

A personal financial statement is a document that gives a snapshot of an individual’s financial position, including a breakdown of assets and liabilities, at a given moment in time. It’s used to track personal goals and growth.

When it’s time to borrow money, banks and other investors may request these records to know exactly who they’re working with. This goes for new loans, loan extensions, etc. Your debt-to-income ratio affects the interest rate you’ll be offered, so periodically assessing your personal financial statement helps you stay in a favorable position.

If you’re working toward long-term goals like a retirement nest egg, tracking the ups and downs of your financial health over time gives you a fair assessment of how far you are from those beachside margaritas.

How to write a personal financial statement

Compiling a personal financial statement can be time-consuming, but well worth the effort. The two main components are assets and liabilities. Assets include the monetary value of anything you own, while liabilities include anything you owe. If you’re creating a personal financial statement to submit in order to demonstrate financial stability, you should also include your personal information (name, address, date, SSN if requested) and information about your income, such as the source and amount. When submitting a personal financial statement to a bank or other lender, you will usually be provided with a template. However, it helps to have information about your assets and liabilities handy at all times regardless.


Assets include any accessible cash, such as checking or savings accounts. They also include inaccessible cash, like investments, retirement accounts, and even money that is owed to you (accounts receivable). Other things of value, such as cars and real estate count as assets too and are important components of your financial health. When including real estate in your personal financial statement, be sure to use the property’s current value (which is hopefully greater than when you purchased the home).


Liabilities include any unpaid accounts, money owed to institutions (student loans, mortgages, etc.), and unpaid taxes. While real estate is an asset, it’s important to note that you must subtract your remaining mortgage from the value of the property, because loans are a liability.

In addition to everything that is included, there are a few key items that should not be included in your personal financial statement. These include any business-related assets and liabilities (unless you are personally responsible, as in a co-signed loan). Rented items and personal property (such as furniture or electronics) are also not typically included. It’s helpful to keep in mind that these items do not contribute to your net worth when considering where to spend your money. For example, buying a home is better than renting because building equity in a home increases your net worth.

Why do you need a personal financial statement?

By subtracting all liabilities from all assets, you can uncover your net worth. Net worth is the value of all financial and non-financial assets you own, minus the value of anything you owe.

Net worth is a powerful calculation because it gives a snapshot of your financial standing. To increase your net worth, you’ll need to either decrease your liabilities or increase your assets. Paying off credit cards and loans, getting a raise at work, or making smart investment decisions are common ways to increase net worth among myriad other avenues to explore.

If you have a negative net worth, it’s an indication that you need to reduce liabilities. This situation isn’t uncommon for young people starting in their careers with student loan debt or individual’s who simply fell on hard times. It can feel impossible to overcome, but the first step is acknowledging the problem and taking a full look at your assets and liabilities.

In this circumstance, consider how you can decrease liabilities while increasing assets. Take on a side gig, partner with a debt management company, cut down on buying rounds at happy hour, or find other adjustments to improve your net worth over time.

Remember, the value of assets can fluctuate and your financial situation can change. That’s why it’s important to reevaluate your personal financial statement at least annually, or any time a significant change to your financial situation occurs.

Professional tools for personal financials

Creating and regularly updating your personal financial statement is an important part of taking control of your finances. As a data-management platform, Causal isn’t just for businesses. In fact, we have a growing library of personal finance templates to help individuals make all sorts of financial decisions. These include making decisions to rent or buy, student loan repayment, and many more.

Whatever your goal, using Causal can help you find a path to financial success and staying ahead. So what are you waiting for? Create your personal financial statement and take control of your financial wellbeing.

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