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How to Create a Personal Balance Sheet

admin Posted by

2022-01-10 08:37:01.225968+00:00

A personal balance sheet is a snapshot of your financial situation on a particular day and time.  It's really an example of where you are both in terms of how much you owe and how much you own. Sometimes a personal balance sheet is called a net worth statement. Net worth is your assets, everything you own minus your liabilities. An asset is any resource of value, tangible or intangible, that is owned by an individual, a company, or a government with the expectation that it will provide an economic benefit. Whereas a liability is a financial obligation that results in the company’s future sacrifices of economic benefits 


Now, when you're going ahead and working on your balance sheet and calculating your Net Worth, you need to put down the true market value of something. The idea is if you converted all your assets into cash and paid all your debts, the remainder is your net worth.


(Formula: Assets - Liabilities = Net Worth)


So let's take a look at this a little more closely. What are assets? What would we include in this? This is really the first step in creating your balance sheet, 


1. Make a list of your assets.

Assets can be divided into 3 categories; 

  • Monetary Assets.

This could be the cash in your wallet or your checking and savings account balances or a friend owes you money. In short, all things are very liquid and ready to go.

  • Tangible Assets.

Such as owning a house, vehicles, furniture, clothes, or tools. Things that you think of as big-cost items that add up. Remember, its market value is what you could sell it for.

  • Investment Assets.

This includes stocks, bonds, mutual funds, or real estate. In other words, things that are in the form of growing for you. 


2. Identify your liabilities.

It could be short-term liabilities like money you owe someone, unpaid services, credit debt, or long-term liabilities like car loans, student loans, or mortgages. Remember the amount that you want to put down on your balance sheet is the current value of debt. For instance, if you have a student loan of KES 40,000 and you have paid KES 10,000, your current liability will be KES 30,000 which will go on your balance sheet.










Savings Account A

KES 10,000

Vehicle Loan

KES 150,000

Savings Account B

KES 20,000

Credit Card A

KES 1,000

Taxable Investment A

KES 10,000

Borrowed from a friend

KES 2,000

Taxable investment B

KES 5,000



KES 45,000


KES 153,000




I’m sure by now, you are wondering where expected income falls under. Is it an asset or revenue? Based on definition only, would you argue your salary is an asset since it gives you economic benefit? From a company point of view, salary is an expense which means it falls under liabilities, right? 


Now, if we look at it from an employee’s point of view(your point of view), I would argue it is a short-term liability since it’s not yet paid, not legible for future projection on a balance sheet. However, it would fall under salary expense in an income statement.


Not counting expected income in your balance sheet can feel like a kick in your gut, but we all feel at one point in our lives, the salary we are being paid isn’t enough to fully survive on. When you begin sorting out your assets and liabilities, you may feel pressure or a negative effect the first time doing it, however, the upside is watching your progress on an annual basis. So, take a look at what you want to do in the future, bearing in mind the balance sheet is the first step to sorting out your finances. 


Written by: Grace Mwarania

Comments: 1

2022-06-01 18:27:34.430228+00:00
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