What Is a Personal Financial Statement?


The personal financial statement (or financial report) is a piece of paper that outlines the individual’s assets as well as liabilities. It is often utilized by lenders to determine the net worth of a loanee as well as other information about their financial status.

Learn to create an individual financial statement and the reasons it’s important for loan applications.

What Is a Personal Financial Statement?

An individual financial report outlines your financial situation in a straightforward format. It is a crucial document to have in the event of a Business loan application. This allows lenders to quickly get your assets and liabilities. If you’re married the financial statement of your finances could include the assets and liabilities and vice versa.

Your net worth is an amount that is the sum of your possessions and liabilities. Therefore, your financial statements will permit lenders to calculate what your worth is. For instance, if you own a home and a car worth $100,000, and a car loan and mortgage of $75,000 Your net worth is $25,000.

The net worth of an individual is the same as the equity of the owner of a company. So, a personal financial statement is comparable to the business’s balance account.

How a Personal Financial Statment Works

If you’re making a presentation of a business plan or request for a business loan to an institution they’ll likely request a financial statement. You might be asked to sign an individual guarantee to a portion of that loan. Alternatively, need to pledge a portion of your assets to ensure your loan (this is known as”collateral loans”) “collateral loan”).

If you need to put up some or all of your possessions, a personal financial statement is needed to verify if you’ve got enough assets to meet the requirements of the loan. The financial statements of your personal will include the types of assets you own. For instance, if are making pledges to investors (like the IRA or 401k) the bank must know how much of your investment as well as the location it is kept.

How Do I Prepare a Personal Financial Statement?

The layout for the financial statements of a person is the same as for a standard. It displays an asset on one side and liability in the middle (like an account statement of balance). The net worth can also be listed at the bottom of the report.

Start by collecting data on both your assets and debts. Anyone who is reading your financial statement will know that it only reflects your net worth by a percentage in time. Therefore, you should make sure to include the most current information available, but don’t be concerned even if the documents are only a couple of weeks older. Your lender knows that the information is always changing.

Some of the assets and liabilities that must be included in the list include:

  • Money in a checking account or savings account
  • It could be an IRA, 401(k), or another retirement account
  • Brokerage accounts
  • The most recent statement of your mortgage on your home and the outstanding balance (you might also require an up-to-date appraisal)
  • A copy of the most recent statement for your auto loan, boat loan, or other loans.
  • Property of significant value that can be proved through an appraisal, for example, jewelry or antiques (but not household items or furniture)
  • The debt owed to credit cards, as well as any other debt which could appear on a credit report
  • A joint debt that you took on through being the co-signer on a loan to another person (this is referred to as”contingent liability”) “contingent liability”)
  • The amount owed is derived from a smaller claim judgment, lien, or similar outstanding debts
  • Taxes not paid from prior years which includes those company payroll taxes that you are accountable

Certain assets, like stocks, have a specific dollar value, however, some assets are not as straightforward to quantify. If you’re unsure about the worth of assets try to arrive at a fair figure but keep it in perspective. If the lender is planning to make use of the assets to provide the purpose of a guarantee for the loan you have for your company, they’ll perform an appraisal.

The rental portion of the personal financial statements, since there’s no ownership. A house rental or leasing a vehicle creates an expense each month, but you don’t have these items which are why they’re not included in the statement unless you’re specifically requested to list the expenses.

In preparations for presenting a business proposal, it is essential to conduct a full credit report on yourself. The lender will perform this, and you’ll want to be aware of what they’ll discover. This implies going above just the FICO score to obtain an entire report with specifics.

After you have completed all the necessary information about assets and liabilities, then you can determine your net worth after subtracting liabilities from assets.

There is a chance your self with a net worth that is negative which means that you have more debt than the assets you own. If that’s the case with you, don’t alter the report by eliminating the liabilities or underestimating assets Accept the reality of your situation. Intentionally misrepresenting yourself on your financial statements could be punished with the possibility of up to 5 years prison and fines that could be up to $250,000.


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