personal balance sheet
A personal financial statement listing all assets owned and all liabilities owed.
Example
“Her personal balance sheet showed $180,000 in assets and $45,000 in liabilities.”
Memory Tip
BALANCE SHEET — two columns. The difference is your net worth.
Why It Matters
A personal balance sheet matters because it gives you a complete picture of your financial health by showing exactly what you own versus what you owe. This snapshot helps you track your net worth over time and make informed decisions about saving, investing, and debt reduction.
Common Misconception
Many people think a personal balance sheet is the same as a monthly budget, but they serve different purposes. A balance sheet shows your overall financial position at a specific point in time, while a budget tracks income and expenses over a period of time.
In Practice
Imagine Sarah lists her assets as a home worth 300,000 dollars, a car worth 25,000 dollars, and savings of 50,000 dollars, totaling 375,000 dollars in assets. Against this, she owes 200,000 dollars on her mortgage and 15,000 dollars on a car loan, totaling 215,000 dollars in liabilities. Her personal balance sheet shows a net worth of 160,000 dollars, which helps her see she has built substantial equity.
Etymology
From Italian 'bilancio' meaning scales — balancing what you own against what you owe.
Common Misspellings
Build a budget and track your spending
Related Terms
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See Also
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