How to Prepare a Personal Finance Statement

culled from:wikihow.com

Steps

1

Decide what format will work best for you. Most people prefer to use a spreadsheet program such as Excel.

• Use a simple pad of paper and a pencil, if you are not good with computers. A handwritten finance statement will be fine if you are the only who will see it.
• Consider a software program that might help you prepare a personal financial statement, such as Microsoft Money or Quicken.

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   Create a balance sheet. A balance sheet will show you how much you own and what you owe, giving you an idea of your personal net worth.
   • Include assets in a column on the left. These will include bank account balances, the amount of money you have in stocks and the value of any property you have.
   • Place your liabilities in a column on the right. Liabilities will include your mortgages, credit card debt and other loans you are repaying.
   • Total the amount of your assets and liabilities. Subtract your liabilities from your assets, and you will have a snapshot of your net worth.
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   Create an income statement. This part of your personal financial statement will show you how much money you earned and how much you spent.
   • Add up all of your income, including salaries, bonuses, rental and business income.
   • Add up all of your expenses, including what you pay in rent, utilities, fees and other regularly occurring bills.
   • Keep a special column or section for extraordinary occurrences of income or expenses that do not happen on a regular basis. For example, a large tax payment, a sizeable bonus or an expensive home repair might throw off your income statement and can be recorded separately.
   • Tally the difference between your income and expenses, and you have an idea of what your net income is.
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   Update your personal finance statement regularly. You might want to do it every month or every other month. This will help you monitor any changes in your finances.
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   Include a narrative with the numbers. This will help you remember what was going on during any specific period of time.
   • Provide a brief description of any special expenses, or note how you calculated some sums, such as the value of your home.
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   Work with a financial planner or advisor. Ask a professional to review your personal finance statement to see if you have missed anything.