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Creating a Balance Sheet

All families should update a balance sheet at least once or twice a year to get an understand of what your true financial situation is.   Even if you aren’t a finance expert, you can definitely put together a quick and easy balance sheet!

Essentially, a balance sheet is a way for you to compare your financial assets with your financial liabilities.   The remainder (which will hopefully be positive) is called your “Net Worth”.   To create your first balance sheet, start out with either an Excel worksheet or a piece of paper.   You should label the first column “Assets” and the second column “Liabilities” (in Excel, leave an extra column in between for the dollar values”.

Start by listing all of your financial assets with the values – here are some of the most obvious examples:

  • Cash (in the bank or CDs)
  • Investments (Mutual funds, college savings accounts, individual securities, etc)
  • Home Value (list the value of your home)
  • Automobile Value (list the resale value of your cars – use the blue book value if you don’t know)
  • Personal Property Value (jewelry, household items, etc)

The sum of all of those values is the total value of your assets.

Next, begin to look at your liabilities.   This should be everything you owe.   Some examples are:

  • Mortgage
  • Car loans
  • Student loans
  • Personal loans
  • Credit card balances

The sum of all of these is your liabilities.   The difference between your assets and your liabilities is your “Net Worth”.   When you are young, it’s very common for this to be negative, however, your goal should be to increase your net worth – which you can do by either increasing your assets, decreasing your liabilities, or ideally, both!   Aim to update your balance sheet at least twice a year – more if you are aggressively looking to make changes.

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