Reviewing Your Personal Financial Statements

In the world of personal finance, personal financial statements are a great tool for any financial planner, financial advisor, or client for assessing a person or family’s financial status.


There is a lot of good information in financial statements; they can tell you how well you are managing your monthly expenses, how much you are worth (financially speaking), and where you may be heading (hopefully not bankruptcy).

Whether you have a financial planner or financial coach, or not, it is important to have financial statements in order guide you in your financial situation.

Here are three financial statements that you must review and why:

Balance Sheet: 

  • A balance sheet is a statement of financial position. It is a financial snapshot of a family or individual’s wealth at a moment in time. It consists of assets, liabilities, and net worth.
  • Assets are items such as a house, an automobile, collectibles, bank or investment accounts.
  • Liabilities consist of credit cards, mortgage payments, auto loans, student loans, or any other type of loan (excluding leases). Net worth is assets minus liabilities.
  • Why do you need a balance sheet? A balance sheet is a measurement of how well you are doing financially. If you have financial goals or are getting out of debt, your net worth is the best way to track your progress. If you feel that you aren’t getting anywhere even though you aggressively attacking your debt, then take a look at your net worth periodically. If is rising, than you are making progress

Bank Statement:

  • Your bank statement shows where you are spending your money and can help you detect charges that may not be yours.
  • A bank statement provides you with tools to balance your checkbook. Yes, I said balance your check book. There are two reasons why people don’t balance their checkbook 1) they don’t know how or 2) they are lazy.
  • Why do you need to look at your bank statements? You can’t afford not too.

Cash Flow Statement: 

  • A cash flow statement is similar to a budget. Most Certified Financial Planners (CFP) consider an entire year of income and expenses as a cash flow statement. 
  • A cash flow statement shows the excess or shortage of income within the budget period. Net cash flow equals total income minus total expenses.
  • Why do you need to look at cash flow? Your cash flow statements show you how much you are saving or how much you need to cut from your budget. It is a great tool at projecting savings and setting goals.

Financial statements are integral parts of businesses. Without them, it is very difficult to make wise business decisions and be profitable. Running a business is not much different from running a household. So why not use financial statements?

The balance sheet, bank statement and the cash flow statement are excellent tools to assess your financial health and provides information for goal setting. If you are getting out of the debt, the balance sheet shows your progress, the bank statement shows where your money is going, and the cash flow statement shows how much extra you can pay down on your debt.

Question: Do you periodically review your balance sheet, bank statement or cash flow statements for your personal finances?

photo credit: Casey Serin via photopin cc

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I provide one on one financial planning, counseling, and coaching coaching services that will help you develop and implement a plan specific to your unique situation. This may include learning how to create a cash flow plan, save for emergencies and purchases, reduce debt, and build wealth. In addition, I can walk with you through a crisis, such as dealing with harassing debt collectors, bankruptcy, and foreclosure.

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