Creating your personal balance sheet is simple once you gather your Asset and Liability information.
To start, subtotal each of your asset categories (Liquid assets, Real estate, etc.) Then add the asset categories together to come up with your total assets. Likewise, subtotal your current liabilities and noncurrent liabilities categories and then add these two together to come up with your total liabilities.
Finally, subtract your total liabilities from your total assets to determine your net worth.
Net Worth = Total Assets – Total Liabilities
If you haven’t already done so, read these articles for the first steps in creating your own balance sheet:
Your Assets and Your Balance Sheet
Your Liabilities and Your Balance Sheet
From this sample balance sheet you can get a visual of why it is called a “balance sheet.” The left column (assets) is equal (or in balance to) the right column (liabilities plus net north.) From looking at the above balance sheet you can see that the Doe family has $183,638 in assets. However, they aren’t $183,638 wealthy. By looking at the right side of the balance sheet you can see the composition of their assets ($103,150 of their assets somebody else has a claim to and $80,488 is their portion of the assets.)
If you would like an Excel or PDF template of this balance sheet or if you have questions about creating your own balance sheet, please contact me: Ask The Financial Reader.