A Personal Financial Statement is a financial report that provides a snapshot of an individual’s financial situation at a specific time. It includes details about a person’s assets, liabilities, and Net Worth. The statement is typically used by individuals when applying for loans or other forms of credit, as it helps lenders evaluate the borrower’s creditworthiness and ability to repay the debt. Many people use Personal Financial Statements to track their financial progress and make informed decisions about their financial future.
Net Worth is calculated by subtracting liabilities from assets. Liabilities include loans, credit card balances, and other forms of debt. Assets listed in a Personal Financial Statement include cash, savings accounts, investments, real Estate, and personal property.
A Personal Financial Statement (PFS) can also include income, expenses, and cash flow information. This can be useful for budgeting and planning for future financial goals. Additionally, a PFS includes personal information such as name, contact information, identification number, employment information, etc.
Overall, a Personal Financial Statement is an essential tool for managing one’s finances, both for the short and long-term and for demonstrating creditworthiness to lenders.
How to Make a Personal Financial Statement
Here are the steps to create a Personal Financial Statement:
- Gather all financial documents: Collect all of your financial documents, including bank statements, investment account statements, credit card statements, and any other records of assets or liabilities.
- List your assets: Start by listing your assets, including cash, savings accounts, investments, real Estate, and personal property. Be sure to include the current value of each asset.
- List your liabilities: Next, list all your liabilities, such as loans, credit card balances, and other forms of debt. Include the outstanding balance, interest rate, and minimum monthly payment for each liability.
- Calculate your net Worth: Subtract your liabilities from your assets to determine your Net Worth. This will give you a clear picture of your financial position.
- Include your income and expenses: Add information about your income, including your salary and any other sources of income. Include your expenses, such as rent, utilities, transportation, and other monthly expenses.
- Review and update regularly: Review your PFS periodically and update it as necessary. This will help you track your progress and make informed decisions about your financial future.
- Make it Professional: Make sure your PFS is well-organized and easy to read. Use a professional template.
- Use it: Use your Personal Financial Statement to plan your budget, track your expenses, apply for a loan or credit, and to monitor your Net Worth.
Note: Keep your financial statement private and confidential, and only share it with those who need to see it.
Example of a Personal Financial Statement
This is a basic guide with the illustration table below to create a PFS in Excel, and you may want to customize the template to meet your specific needs. Follow the steps in the example below to prepare an Excel Personal Financial Statement.
1. Personal Information and Date
First, add your basic personal information in an excel sheet.
| Date: | |
| Name | John Doe |
| Address | 10400 Eaton Place, Fairfax, VA 22030 |
| Phone Number | 703-865-6161 |
| info@neatfinancials.com | |
| Occupation | Self Employed |
2. List of Assets
Second, let’s assume we have the following assets.
- As of now, your Checking Account Balance is $ 10,000.00, and the money in your Saving Account is $ 20,000.00.
- 2. Stocks & Bonds in your broker accounts, such as Robinhood and Ameritrade, is worth $25,000.00. Remember that it does not matter how much you gain or lose; $ 25,000 is the current value of stocks, bonds, and coins if you sell them now.
- Let’s say the current value of your retirement account (such as 401K and IRA) is $30,000.00
- Your home value in the housing market is $500,000. This is not your purchase price, and it does not matter how much mortgage loan you have. This is the price of your home if you put it on the market. You can also use Zillow to estimate your real estate value.
- Closely Held Companies are your business if you own any. Let’s you have a coffee shop, and it would be worth $300,000.00 if you sell it today.
- The last asset we will add is your car value. Imagine you have a car, and you can sell it for $45,000 if you list it on a used car website. This is the price of the vehicle, no matter how much you paid for it and how much loan you have on it.
| Checking Account Balance | $10,000.00 |
| Saving Account Balance | $20,000.00 |
| Stocks & Bonds | $25,000.00 |
| Retirement Accounts | $30,000.00 |
| Real Estate | $500,000.00 |
| Closely Held Companies | $300,000.00 |
| Vehicles | $45,000.00 |
3. List our liabilities
- Let’s assume today; your credit card balance is $5,000. This is the amount we will use, no matter how much the minimum balance or available credit is.
- The mortgage loan balance on your home is $320,000. This is the amount left as of today. It is not the amount of loan you had when you purchased the house. And it does not matter what your interest rate or monthly payment is.
- The loan on your car is $20,000, which has a value of $45,000.
- You have unpaid income taxes for your previous year, and the balance is $3,000
| Credit Card | $5,000.00 |
| Home Loan | $320,000.00 |
| Car Loan | $20,000.00 |
| Unpaid Taxes | $3,000.00 |
4. Calculation and Net Worth
Let’s list all the assets on one side and liabilities on the other side with the amounts as shown below. After that, we add all the balances of assets and liabilities separately. Then we will substruct total liabilities from the total asset; the difference is the net Worth. Congratulations, you have created a Personal Financial Statement wich shows your Net Worth as of today.
| Date: | |||
| Name | John Doe | ||
| Address | 10400 Eaton Place, Fairfax, VA 22030 | ||
| Phone Number | 703-865-6161 | ||
| info@neatfinancials.com | |||
| Occupation | Self Employed | ||
| Checking Account Balance | $10,000.00 | Credit Card | $5,000.00 |
| Saving Account Balance | $20,000.00 | Home Loan | $320,000.00 |
| Stocks & Bonds | $25,000.00 | Car Loan | $20,000.00 |
| Retirement Accounts | $30,000.00 | Unpaid Taxes | $3,000.00 |
| Real Estate | $500,000.00 | ||
| Closely Held Companies | $300,000.00 | ||
| Vehicles | $45,000.00 | ||
| Total Assets: | $930,000.00 | Total Liabilities: | $348,000.00 |
| Net Worth: | $582,000.00 | ||
Other Items on Personal Financial Statement
Income and Expenses
Most Personal Financial Statements include income and expenses. You should make a list of your average annual income from salaries and wages, interest income, dividends, business income, and rental income if you have any of them. In the same way, you need to list your annual expenses, such as monthly mortgage payments or rent, car payments, and credit card payments, in another column.
Schedules
Some Personal Financial Statements, especially those provided by the banks, include schedules. Those schedules describe your assets and liabilities in detail.
Questionnaires
Many Personal Financial Statements contain a section where you will see some questions, such as if you are a US citizen or have ever filed for bankruptcy. Read all those questions and answer accordingly.
Signature
The final part of the Personal Financial Statement is usually about sharing your personal information with a bank or any other institution and attesting that the information is correct best of your knowledge.
When Do You Need a Personal Financial Statement?
Once your PFS is complete, you can track your financial progress over time, set financial goals, and identify areas where you may need to make changes to improve your financial situation. It can also be used to apply for loans or credit and provide financial information to potential employers or investors.
Loan application for a business or investment property
Banks or other lenders often need the owner’s Personal Financial Statement in order to process the loan application, even if it is for a business or investment real estate property. Banks want to see how much liquid the owner has and if there is any huge debt that can create a risk to repay the loan. Other personal information, such as income and expenses, give the bank a clear insight into the borrower’s financial situation.
SPA Loans
US Small Business Administration loans require Personal Financial Statement along with other financial and tax documents. However, SBA’s PFS is specifically designed for the organization’s own requirements. The Personal Financial Statement for the SBA is named SBA Form 413.
Renting a commercial real estate
When starting a new business and you are searching for a storefront, office space, or warehouse, the property management company will ask for a completed and signed PFS along with the application form. Before renting the commercial space, the property manager wants to see the business owner’s personal financial situation. They favor if the tenant has enough capital to start the business. They also want to see if the applicant has any high debt or balance due.
Financial planning for retirement
When you work with a Certified Financial Planner, they may require your Personal Financial Statement. The PFS gives a clear idea to Certified Financial Planner to assess clients’ current financial position and evaluates options to reach retirement goals.
Tracking your Net Worth
It is always a good habit to keep track of one’s Net Worth regularly. The PFS helps to analyze the current financial position and helps to estimate how far you are from your future financial and retirement goals.
3 Best Personal Financial Statement Solutions
There are the following ways you can prepare your Personal Financial Statement.
1. NeatFinancials PFS Software
NeatFinancials is Personal Financial Statement software. You can create your PFS in a few minutes. It is simple, easy, and free. Generate your PFS, sign it electronically and send whoever you need. Another feature of NeatFinancials is that you can store your information and use it when you need a new PFS. You don’t have to re-enter all the information again; just a few updates will be enough for a new and updated PFS.
2. Personal Financial Statement Template
A Personal Financial Statement template is a document that provides a standardized format for an individual to list their financial information. It typically includes sections for personal information, income, assets, liabilities, and net Worth. A personal financial statement template can be in different files such as Excel, Word, or PDF.
3. Excel
Creating a Personal Financial Statement in Excel is a simple process that can be done using a spreadsheet program like Microsoft Excel.
