Use the worksheet below to create a Balance Sheet and calculate your Net Worth. Once you have completed this see the questions below to analyze the information, so you can better understand your financial position.
NAME________________________________________________ DATE __________________
ASSETS (What You Own)
| Cash | |
| Checking account | |
| Savings account | |
| Money-market account | |
| CD’s, treasury bills | |
| Securities | |
| Stocks | |
| Bonds | |
| Mutual funds | |
| Other | |
| Real estate | |
| Residence | |
| Other real estate (List) – | |
| Business interests (List) | |
| Retirement funds | |
| IRA | |
| Keogh | |
| 401(k) | |
| Vested portion of company plan | |
| Annuity | |
| Life insurance, cash value | |
| Personal property | |
| Automobiles and other vehicles | |
| Household furnishings | |
| Boat, plane, recreation vehicle, etc. | |
| Antiques, collectibles, art | |
| Furs, jewelry | |
| Other | |
| Other assets (List) – | |
| TOTAL ASSETS |
LIABILITIES (What You Owe)
| Current bills | |
| Credit cards | |
| Charge accounts | |
| Medical and dental | |
| Other (Categorize and list) | |
| Taxes | |
| Income—Federal and State | |
| Property—Real and Personal | |
| Other | |
| Mortgages | |
| Residence | |
| Other property (List) – | |
| Business interests (List) | |
| Loans | |
| Auto | |
| Home improvement | |
| Education | |
| Life insurance | |
| Margin account | |
| Other (List) – | |
| Other liabilities (List) – | |
| TOTAL LIABILITIES |
ASSETS – LIABILITIES = NET WORTH
YOUR NET WORTH = _____________________________________________
Analyze Your Balance Sheet
Determining your net worth is the starting point for everything else you do in financial planning. After you’ve arrived at your net worth, you will find it productive to analyze your balance sheet by asking the following questions about your assets and liabilities.
Has your net worth increased each year, or since your last balance sheet? If it hasn’t, you need to determine the reason and perhaps make some changes in your spending, saving, or other financial habits.
Does your balance sheet reflect a preference for personal assets such as an expensive home, cars, furs, and jewelry? Your balance sheet should show a concern for acquiring investment assets, not just personal assets that are far less likely to increase in value or produce income that will help you meet other financial goals.
Is your debt out of proportion? If your balance sheet shows excessive debt, especially for personal consumption, that’s a signal to review your spending. Keeping debt under control is essential in good financial management.
Have you given enough thought to money needed for retirement? If your balance sheet shows total neglect for accumulating funds for retirement, you’ll want to make some changes as soon as possible.
Are your assets diversified? Diversification is a good hedge against inflation and changes in the economy. Having all your eggs in one basket is seldom a good idea. Also, don’t keep excess cash in non-interest or low interest accounts unless you have an immediate need for the cash.