When applying for credit or a loan, many lenders will ask to review your personal financial statement. If you’ve never created one before, it can seem intimidating, but the process is fairly simple. Here are a few tips for creating your personal financial statement (and a template) to help you get started.

What is a personal financial statement?

A personal financial statement (PFS) is a document that outlines your financial position at a specific point in time. It identifies assets and liabilities to find net worth and provides a clear picture of your financial health. A PFS can help you make informed decisions about spending, saving, investing, and planning for the future.

A PFS is most often needed when applying for business loans or mortgages but may be required for other types of credit, like personal loans. Lenders will assess a loan applicant’s PFS to determine financial health and lending eligibility.

4 steps to creating your personal financial statement

1. Gather necessary information

Start by compiling all relevant financial information, including bank statements, investment portfolios, real estate holdings, and outstanding debts. This can be done with paper copies of statements or through digital account access.

2. Calculate your assets

Assets are everything you own that has value. Common categories include: cash and cash equivalents, investments, real estate, and personal property (such as jewelry, art, furniture, vehicles, boats, collectibles, etc.).

Asset categories

• Liquid assets
• Cash in bank accounts
• Publicly traded investments

Non-current assets

• Retirement accounts
• Real estate
• Other real estate market value
• Other assets

3. Calculate your liabilities

Liabilities are your financial obligations. Common categories include: mortgages, credit card debt, student loans, and other debt.

Liability categories

• Total revolving credit (i.e. credit cards)
• Total student and installment loans such as personal loans
• Mortgage on personal residence
• Mortgage(s) on other real estate
• Other liabilities

4. Determine your net worth

Subtract your total liabilities from your total assets to determine your net worth. This figure provides a clear picture of your financial standing and serves as a benchmark for measuring financial progress over time.

Assets – Liabilities = Net Worth

Personal financial statement template

Are you ready to create your PFS? Whether applying for a loan or wanting to know where you are financially, this simple-to-use template can make the process of gathering your financial information and calculating your net worth a little easier. Click here to download the free personal financial statement template.

Tips for maintaining & using your personal financial statement

Make regular updates: Make it a habit to update your PFS regularly, ideally on a quarterly basis, to reflect any changes in your financial situation.

Review and analyze changes: Take the time to review and analyze any fluctuations in your assets, liabilities, and net worth. This will help you identify trends, spot areas for improvement, and adjust your financial strategy accordingly.

Set financial goals: Use your PFS as a roadmap for setting and prioritizing your financial goals. Whether it’s saving for retirement, paying off debt, or buying a home, align your goals with your current financial reality.

Common mistakes to avoid

Incorrectly estimating assets: Be conservative yet realistic when valuing your assets to avoid skewing your net worth calculation.

Neglecting certain debts: Don’t overlook any outstanding debts, no matter how small they may seem. Even minor debts can impact your overall financial health.

Using your personal financial statement

Your PFS is more than just a document—it’s a powerful tool for assessing your financial health, making informed decisions, and tracking your progress toward your financial goals. Refer to it regularly to stay on course and make adjustments as needed.

If you are preparing your PFS as you head toward practice ownership, Panacea Financial can help you be fully prepared for this next step in your career. Find other tips and information you should know as you take the next step in your career in our free “A Dentist’s Guide to Acquiring a Practice.” Download it here.