Is An Up-To-Date Personal Balance Sheet Really That Important?

Should everyone keep a personal balance sheet?

A personal balance sheet can help you see the bigger picture of your finances.

It’s not just looking at your bank account balance.

It’s putting your debts and assets in front of you to show you the big picture about debts you owe and things you own.

You’ll need to collect your monthly loan and credit card statements, as well as bank and investment account balances in order to list out all of your assets and liabilities.

Keeping track of a personal balance sheet helps you separate yourself from just your day-to-day spending and look to your long-term financial goals.

Like funding higher education, paying off large purchases, getting out of debt or saving a certain amount for retirement.

Whatever the size of the sheet or the numbers, everyone should keep a personal balance sheet and update it at least 2-3 times a year.

When can having an up-to-date balance sheet be beneficial?

There are plenty of opportunities when an updated balance sheet comes in handy.

If you’re considering a new job, the balance between your debts and assets is a contributing factor.

Considering a lateral move for better benefits, for example, might give a substantial boost to your retirement goals.

If you’re looking to make a big purchase, having an up-to-date balance sheet is vital. How will you know if you can afford to buy a house or car or boat if you don’t know how much you spend to pay down your debts each month?

Another example is if you’re looking to get a personal or business loan. Banks or financiers want to see healthy numbers in your asset-to-debt ratio.

What about making investments? How can you know if you have the margin for investing if you don’t have an accurate financial snapshot?

And if you have an emergency, like a sudden health issue, job loss or accident, would your savings and cash flow cover the balance?

Is there anyone that doesn’t need a personal balance sheet?

You might think having a personal balance sheet isn’t necessary for you.

But knowing your net worth is your key to financial freedom and independence.

It creates the cash flow to cover your expenses if you didn’t have any income coming in from a job or your business.

Organizing your assets in a personal balance sheet can also help you identify where your financial stress is coming from.

As you take a look at your numbers in the debts and assets categories, what becomes the priority for you?

Pinpointing your priority helps direct your financial future.

And setting out your goals on paper helps you achieve them, rather than leave them theoretical or vague.

If you need help getting your personal balance sheet in order, give the experts at Morgan & Associates a call, or fill out the contact form below. We’re here to help!