Personal Balance Sheet & Wealth Building

Learn why knowing what your “assets and liabilities” are can help determine your net worth and help you build wealth more efficiently in the current economy…


As you build wealth it is important that you have an understanding of the assets that you own and the liabilities that you have incurred so that you can do more to build your wealth to an acceptable level or a level that you need to attain to make your life more meaningful and significant while you are here on planet earth.


By knowing what you are worth you put yourself in a better position to manage your finances and reach your financial goals.


In this discussion will discuss the importance of utilizing a “personal balance sheet” so that you can know what you are worth “from a financial perspective” and provide guidance on how you can use that knowledge to build wealth more efficiently in the coming years.


This discussion builds off of Personal Financial Statements including  Cash Flow Analysis, Personal Income Statements and Net Worth that were discussed in previous articles.


By taking the following 3 steps you can help ensure a more prosperous future for your family and loved ones and by implementing those three steps at this time–help you “engage in your finances” in a manner that can lead to true and lasting success for the duration of your lifetime, and even after you transition!


1) Compile a list of your assets and liabilities

It is important that you take inventory of what you own and who you owe.


A personal balance sheet can help give you the needed focus so that you know who you owe and what you own in a more concrete and definite manner.


At this time you may want to gather all of your financial documents (bank statements, investment statements, mortgage statement, life insurance policy, auto loan statement, credit card statement, student loan statement, personal loan statement along with other documents that show ownership or in which you owe others) so that you can determine your “net worth” and start on a realistic path that can lead to you making better financial moves from this day forward.


By entering the required data in the form below you can get a better feel of where you can go in your financial future and you can enhance your probability of achieving the success that you desire from this day forward!


To determine your value of your home you may want to contact your real estate agent or the agent who helped you purchase your home to determine the value.  If you have a mortgage you would subtract what you owe from the valuation that you get from the real estate agent to determine your equity position of your home (asset).


On the form below enter the market value of your home under assets and what you owe on the mortgage(s) (if you have one) under liabilities.


To determine your value of your auto you may want to utilize the kelley blue book to determine the value of your auto and if you have a loan you would subtract what you owe from the valuation that you get from the kelley blue book or other auto valuation service to determine your equity position of your auto (asset).


On the form below enter the market value of your auto or other personal use  asset under assets and what you owe on the loan(s) (if any) under liabilities.


Keep in mind that “personal use assets” include your auto, motorcycle, boat or other watercraft, bikes, recreational vehicles and other assets that are of a personal nature.


For your household assets and other assets you can use an appropriate method of valuation or use professionals if you desire–just keep in mind the valuation may not be accurate as it is only an estimate and estimates may not reflect the true value of the asset(s).


However, your estimate or other professionals estimate of value will provide valuable insight (no pun intended) in helping you to determine your net worth as opposed to “shooting from the hip” and not being close to the true value of your assets, and hence your net worth.


How to create a Personal Balance Sheet in Simple Form:


Balance Sheet 10/16/2021 (Enter the date that you create your balance sheet)


Cash/Cash Equivalents 

JT Checking                                     $_________

JT Savings                                        $_________

H Checking                                       $_________

W Checking                                      $_________

H Savings                                          $_________

W Savings                                         $_________

JT Certificate of Deposit                   $_________

JT Money Market                             $_________

JT Other                                            $_________

Total Cash & Cash Equivalents                                      $_________


Invested Assets

Cash Value Life Policy                       $_________

Stocks                                               $_________

Bonds/Mutual Funds                        $_________

Other                                                $_________

Total Invested Assets                                                         $_________


Personal Use Assets

JT Personal Residence                        $_________

JT Vacation Home                              $_________

JT Jewelry                                           $_________

JT Furniture & Household                  $_________

JT Auto(s)                                            $_________

JT Other                                               $_________

Total Personal Use Assets                                                  $_________


Total Assets                                       $_________


Liabilities & Net Worth:

Current Liabilities 

JT Credit Cards                                     $_________

H Credit Cards                                      $_________

W Credit Cards                                     $_________

Other                                                    $_________

Total Current Liabilities                                                     $_________


Long-term Liabilities

H Mortgage                                       $_________

W Mortgage                                      $_________

H Auto Loan                                      $_________

W Auto Loan                                     $_________

Other                                                 $_________

Total Long-term Liabilities                                            $_________


Total Liabilities                            $_________


Net Worth

Total Assets                     $_________

– Total Liabilities             $_________


TOTAL Net Worth                                                       $_________


Note:  JT means Joint Tenancy

H means Husband

W means Wife


2) Use your knowledge of your net worth and your current financial position to build your wealth more efficiently and reach your retirement number

After plugging in the appropriate numbers above and determining your net worth and knowing where you now stand financially, you are now in position to plan for long-term success.


You can now plan for your retirement years in a more appropriate manner because you now know your cash flow position on a monthly and annual basis and that allows you to use your discretionary income to save for retirement and reach your retirement number.


If you lacked the discretionary income you would know what you need to do to get in a better (pay off debt, get more income, gain new skills etc.) position so that you can pursue your retirement number and other goals at a later date.


3) Ensure that you comprehensively manage your finances so that you can achieve more

By knowing your net worth at this time you can plan for your future in a more wholesome manner.


You can address your insurance, investments, taxes, education planning, estate planning/wills and retirement planning from a position of strength as opposed to letting anxiety and other excuses that you may come up with rule the day!


You can create and properly fund an emergency fund (if you have not done so already) so that you can achieve more and you can manage your credit, assets and other liabilities that you may owe in a manner that is more favorable to you and your family–not creditors.



By knowing what you own and what you owe “at a particular point in time” you can create written plans that can lead to your net worth increasing on a consistent basis.


Always realize that when valuation of your assets are concerned you may have to use estimates that you or other professionals make, and as we all know an estimate is only and estimate–however it does help you get a better handle on your finances and net worth than merely guessing.


Regardless of your net worth, you must realize that your self-worth is far more important in the long run as you must know that you are worthy of what you think you are worthy of.


By having that mindset, you position your mind and heart to make future moves that can increase your net worth to an acceptable level and help you manage your money more efficiently at the various stages of your life–even if you now have a negative net worth.


You can position yourself to manage your money better and achieve at your highest level of excellence.


It is imperative that you know your net worth at a particular point in time so that you have a metric that you can use to track your advancement over time so that you can truly reach your goals!


If your current net worth is $150,000 in October of 2021 and you manage your finances effectively for a number of years and your net worth increases to $500,000 by October of 2030, you know that you are making real progress and making good financial decisions.


On the other hand if your current net worth is $150,000 in October of 2021 and you manage your finances for a number of years and your net worth only increases to $200,000 by October of 2030, you know that you are not making real progress and you are not managing your finances effectively–generally speaking.


You now have an understanding of how you can use your personal balance sheet and other  personal finance statements to make your dreams come true if you do what you  need to do.


Over the past six weeks or so you have learned how you can use a budget or personal cash flow statement, personal income statement and personal balance sheet to improve your net worth and achieve your goals more efficiently.


It is important that you realize that your “personal net worth” and your “credit score” are in most cases the two most important numbers that measure your financial health–and your understanding of how you can use these numbers to your advantage is critical as you build wealth.


Y9u also know that your “retirement number” is a key number that you should aspire to reach if you desire to live out your life in a dignified manner that allows you to do what you want to do during your retirement years and even after you transition from planet earth.


While you may have thought it to be hard and time consuming to calculate your personal net worth prior to visiting this page and site, you now know that calculating your net worth is not as difficult and draining as you may have thought if you organize your financial data and you have an effective approach.


Likewise, your credit file and credit score is easy to access and improve upon if you have the right approach!


Always realize that your net worth and credit score are highly correlated, meaning if you have a high net worth you would generally have a higher credit score than those with a low or negative net worth.


Even so, your net worth is not used to calculate your credit score, as rating agencies use figures other than net worth to calculate your credit score.   In our next article will discuss in clear terms how you can improve your credit score and manage your credit effectively throughout your lifetime.


You are now on a serious path toward achieving your goals and you are now much more informed on how you can achieve more financially and make your journey toward significantly improving your finances a more joyous and rewarding experience.


All the best as you increase your net worth and improve your living conditions while you are here on earth…


NOTE: You or your in this discussion could mean you as well as other members of your household who contribute financially whether it be your spouse or other members of your household.


Find out what you can do to make your dreams come true–by visiting our most frequented page–Wealth Building & You…


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