Let's Get Your Personal Financial Statements In Order

Maybe you have been thinking of applying for a business loan, making a business proposal, or creating a business plan. This may have made you keen to check your current personal financial statement: your stream of assets, equity, and liabilities. Sadly, you don’t have any idea in the accounting verse.

A personal financial statement is a document that gives details of an individual's assets and liabilities. It is often used by creditors to learn the loan applicant's net worth and other necessary details of their financial life.

Setting up your financial statements can be burdensome. But having a smooth and clear organization of accounts and transactions can get you far.

What are the necessary lists to keep track of and organize your personal financial reports?

1. Prepare your financial details and transactions

You must establish a list of all your expenses that are divided according to their respective categories. You must take into account all the checks that have been disbursed, purchases made, and all cash outlays and expenditures. This will keep you updated on how much you have really spent and know the record of the outflow of your finances.

On the other hand, all revenues must also be established, properly logged, and categorized. This will tell which are your taxable and non-taxable income and will be easier for you in filing tax clearances and in your year-end financial statements.

Having a record of all your obligations, properties and investments will also assist you in coming up with your financial report.

2. Keep your records clear, correct, and auditable

Since you have good record keeping in your personal and business transactions, preparing your personal financial reports will be easier. This provides relevant information in controlling and auditing your cash and other resources. You can assess the status of your transactions anytime as you keep track of how they come in and go. Being accurate in the records will also give you up-to-date details and correct data in your monetary reporting and forecasting.

3. Formulate your reports

As we have two basic personal financial statements—the Cash Flow and Balance Sheet, the accounting information to be used will also rely on how you properly recorded and kept it. You or the assigned accountant for these FS will gather information on your assets and liabilities, and even revenues and expenditures.

The moment you have entered all the info on your assets and liabilities, you can finally calculate your net worth by subtracting your liabilities from the assets.

4. Get into Financial Consultation

A financial consultant is an expert who can provide you advice and support with your personal or business monetary concerns. They will assist you in almost all aspects of finance which include recordkeeping, budgeting, taxation, forecasting, allocation of assets, and even in the preparation of your financial statements.

Takeaway

Keeping your personal financial statements allows you to know the state of your financial position you are in. It enables you to organize your assets, liabilities, and equity and keeps you on track of your financial health that could help you in an application for a loan or even in establishing a business of your own.