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# How To Create a Personal Balance Sheet

Calculating your personal net worth is the best way to know exactly what your starting point is, in any financial plan you develop. A balance sheet calculates your net worth by comparing your financial assets (what you own) with your financial liabilities (what you owe). The difference between the two is your personal net worth. Don’t be discouraged if your net worth is negative—keep in mind that this should be an accurate depiction of your financial situation. Setting goals is much easier once you know what your current net worth is.

Before you get started, pull together all of the information that you have available. You’ll need your latest bank statements, as well as the principal balance of any loans you have. Once you have all of that information available, start developing your balance sheet by listing all of your assets (financial and tangible assets) with the values.

• Cash (in the bank, money market accounts, or CDs)
• All investments (mutual funds, college savings accounts, individual securities)
• Home value (the resale value of your home)
• Automobile value (the resale value of your car)
• Personal Property Value (resale value of jewelry, household items, etc)
• Other assets

The sum of all of those values is the total value of your assets. Your goal should be to continually increase your assets.

Next, you can look at your liabilities, which should be everything you owe. Here are some common liability categories:

• Remaining mortgage balance
• Car loans
• Student loans
• Any other personal loans
• Credit card balances

The sum of all of the money you owe is your liabilities. As you start to pay down your debt, your total liabilities will decrease.

The difference between your assets and your liabilities is your net worth. You can start to increase your net worth by decreasing your liabilities, increasing your assets, or by doing both! Make sure you continuously update your balance sheet—at least twice per year—to ensure that you are meeting all of your financial goals. For help calculating your net worth, use this simple Net Worth Worksheet.