Wait… why should I have a personal financial statement?
Having and keeping track of your own personal financial statement can be very eye-opening. It can tell you how you’re doing money-wise and exactly where the money you have spent is going. Plus, if you pay close enough attention, it can show you how to improve your current financial situation.
Everybody should have a personal financial statement to look over. It’s beneficial not only for your own knowledge but it could also help you get a loan if necessary.
How do I make a personal financial statement?
Making a financial statement doesn’t have to be all too complicated – even if you’re just getting started. The easiest starting point for a statement would be to list all of your assets and liabilities. This will show you what your net worth would be. For example, let’s say your car is a 2014 Ford Escape valued at $7,000, but your car loan has a payoff amount of $7,600. Should this be your only asset, your net worth is negative $600.
The best way to keep track of your assets and liabilities would be to track each in their own separate columns. By doing this, it will be easy to add up both columns at the end and subtract your total assets from your liabilities to get your net worth.
How often should I keep track of my financial statement?
There is no strict rule for tracking your financial statement. You can track it daily, annually, or anywhere in between. Personally, I track my financial statement monthly. Over time, though, I would like to start doing this bi-weekly to stay on top of both my net worth and financial direction.
Another good way to keep track of your financial statement is to share it with a friend. You both can talk about what you think of each other’s statements, what changes can be made, and lay out goals for your net worth. Doing this will keep you both accountable for your net worth and push each other to increase it.
How will having one help me?
I truly believe having a personal financial statement can help not only build towards your ultimate financial objective, but it can help in your current situation. It can push you to do better regardless of whether you have a small or large net worth. Keep in mind that there is always room for improvement. Never think “I have too little to bother with this” or “I have too much already.” Robert T Kiyosaki, a multi-millionaire and writer of the bestselling book Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!, keeps constant awareness of his personal financial statement and still meets annually with his best friend to discuss their financial goals.