Personal Financial Statement

What is Personal Financial Statement?

A personal Financial Statement is a document or a set of documents that determine the current financial position of an individual. It can consist of one or more than one documents, like a balance sheet or an income sheet. It provides information regarding an individual’s assets and liabilities, and can properly calculate the overall wealth of the said person.

Two of the primary documents found in a Personal Financial Statement are the Balance Sheet and the Income or the Cash Flow Sheet.


This is a document that shows several key factors in your overall wealth. A balance sheet shows the summary of what you own (assets) and what you owe others (liabilities), and finally calculate what you’re worth at a given period.

Assets: Assets are generally of three types: Liquid Assets, Large Assets, and Investments. Liquid assets are the things that can be sold in a jiffy, and you can get some cash out of them. They include your checking accounts, savings accounts, and your money. Large assets, on the other hand, include large things like your home, your car, your property, etc. While calculating your large assets, it is essential to consider their current market value. Investments are your bonds, your stocks, mutual funds, and real estate.

Liabilities: Liabilities refer to what you owe others. They include your pending bills, like your electricity or your internet bill, your unpaid loans, EMI’s and other pending payments.

Net Worth: This is calculated by deducting your total liabilities from your total assets.


Your income or cash flow statement is determined through your cash inflows and outflows for a particular period. These include your

  • Salaries
  • Your savings account interests
  • Dividends from your investments
  • Gains from stocks and bonds.

The usefulness of Financial Statements:

Personal Financial Statements can help people in several different ways. It is a document that helps to determine your total net worth and your assets. It can be used in:

  • APPLYING FOR A LOAN: Personal Financial Statements can come in very handy while applying for a loan. If you want to buy a new home or a vehicle and want to apply for a car or home loan, it is quite common for the bank to ask for your Financial Statements. The bank does this to determine your yearly income, your assets, debts, and other liabilities to check if you are eligible for the loan or not. You can also be asked to place some of your assets as a guarantee for your loan.
  • TO REGULATE YOUR ANNUAL EXPENDITURE: If you consider yourself as a person that spends a lot, sometimes more than your income, then a personal financial statement can come in handy for you. With the help of the statement, you can check how much you have been spending yearly, and compare that to your debts as well. This can give you an overview of your financial expenditure, and can also help to regulate it.
  • FOR PLEDGING INVESTMENTS: If you are planning on pledging investments, like an IRA or 401K, then the bank will need to know where the investment is kept. Your Personal Financial Statement will be required to provide that information.
  • TAX DECISIONS: In order to file your annual tax return, it is important to form your personal or professional financial statement. It helps in calculating the tax and also calculating your overall assets and expenditures, giving you a full synopsis of what you have and what you owe to the government as tax.