personal financial statement
A document summarizing personal net worth and cash flow — the individual equivalent of a corporate financial statement.
Example
“The personal financial statement showed net worth of $245,000 and monthly cash flow of $1,200.”
Memory Tip
STATEMENT — your personal financial report card. Update it annually.
Why It Matters
A personal financial statement provides a clear snapshot of your overall financial health by showing what you own versus what you owe. This information is essential when applying for loans, mortgages, or credit because lenders use it to assess your creditworthiness and ability to repay debt.
Common Misconception
Many people believe a personal financial statement is the same as a credit report, but they are different documents. A credit report only shows your borrowing and payment history, while a personal financial statement includes all your assets and liabilities to give a complete picture of your net worth.
In Practice
If you are applying for a mortgage, your bank may require a personal financial statement showing assets of 250,000 dollars including your savings and investments, liabilities of 80,000 dollars in student loans and car payments, resulting in a net worth of 170,000 dollars. This statement helps the lender determine whether you have sufficient financial stability and assets to qualify for a 300,000 dollar home loan.
Etymology
From corporate finance applied to personal finances — balance sheet plus income statement.
Common Misspellings
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See Also
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