October 21st, 2011

Creating a Personal Finance Statement

If you own a small business or are self-employed, this guide will help you track income and expenses on a regular basis.

Entrepreneurs tend to create personal financial statements for one of two reasons. Either they love numbers and want to track expenses and income in order to know what makes their business tick, or they are meeting with a lender or an investor who will want to review financial statements.

Business owners who are intimidated by financial analysis tend to fall into the second group—they act only when pushed. But that can be a mistake. Knowing one’s way around a financial statement is an important step in maturing as a business owner. A personal financial statement is also a helpful tool in helping you to understand the separation (and blurring of the line) between an individual’s assets and liabilities, and those associated with his or her business venture.

To be sure, managing financial statements is not exactly the most creative or glamorous aspects of running a business. “If ever I ask people why they want to start a business, it’s a sense of self fulfillment or I want someone to be able to experience this certain product,” says Chuck Matthews, executive director of the center for entrepreneurship, education and research at the University of Cincinnati. “But creating and maintaining a budget is one of the most important things to do.”

So, whether you are ready or not, you should sit down with your financial account information and create a series of Excel spreadsheets—starting with a balance sheet and income statement. These documents will make up your personal financial statement.

Creating a Personal Finance Statement: The Balance Sheet

A balance sheet’s purpose is to show the assets you own and the liabilities you owe. When calculated, the positive assets and negative liabilities will show your net worth.

Among the assets to include on your balance sheet: bank account balances, the value of stocks owned, and the value of your property. Simply log on to your bank’s account and any brokerage accounts to obtain current numbers. In order to obtain accurate property values, you’ll want to call your real-estate agent who does appraisal and get an updated value assigned to any property you own. While you’ll want to create a new personal financial statement every month, this step isn’t necessary every time – just try to keep your property value updated each quarter.

As for liabilities, add any sort of lease, mortgage, credit-card debt, or loans you are currently repaying. Simply log on to your lender’s site (which might be the same as your personal and business accounts from the assets column) and get the most recent numbers. Some easily overlooked liabilities are tax payments and accounts payable.

It helps to consider this balance sheet just a snapshot of what you have and what you owe. You are not creating a ledger for the week, month, or year. You are simply trying to take a picture of your net worth at one moment in time.

For a complete list of all the items a balance sheet can include, check out’s detailed guide.


About the Author

DeAndra Harrison
DeAndra` A. Harrison, Editor for Socialtik Mag is a Columbus, OH native, trying to survive in the "concrete jungle of NYC", who is passionate about her entrepreneurial ambitions. She is striving to succeed and she will let everyone know. She believes that helping herself is not enough, so she actively imparts the knowledge she acquires to those around her.



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