Source: The one-page financial plan – CARL RICHARDS
– HOW TO CREATE A PERSONAL BALANCE SHEET –
Once we get past all the drama and emotional resistance, creating a balance sheet is actually quite simple. All you’re going to do is list what you own (assets) and what you owe (liabilities). You don’t need a fancy spreadsheet or even a computer for this exercise. Just grab a blank piece of paper and a pen. Then draw a line down the middle.
On the left side, list all your assets in detail. Bank accounts, the fair market value of your home, your investment portfolio. For every asset, list it and its value. On the right side, list all your liabilities. Credit card debt, mortgage, school loans. Again, get specific and list the actual amounts of each liability. (If you’re wondering why I’m even taking the time to walk you through something so simple, it’s because I keep crossing paths with people who’ve never done this.)
To create the list of assets, I will ask questions like:
- How much do you have in savings?
- What’s the value of your house? (a fair estimate will do)
- What do you have in investments or retirement accounts?
To create the list of liabilities, I will ask questions like:
- What’s your credit card debt?
- What’s the mortgage balance? (remember, you already listed the fair market value on the lift side of your sheet)
- Any other loans (car loans, student loans, etc.)?
If you’re not sure about any of the numbers, call your bank, credit card company, or advisor. When it comes to debts, guessing isn’t allowed, so take whatever steps you need to get the real numbers on the page. When it comes to assets, estimates are fine, but strive to be as accurate as you can.
Then add up all your assets and subtract all your liabilities. You now have your net worth! =)
We make a living by what we get (donation)
When you give (money), you are abundance =)