What to Look for in Your Personal Financial Statements
A personal financial statement is a summary listing of all of an individual’s personal assets and liabilities. If you have a statement, it is important to how to analyze it and how it relates to you. This will help you to know what is working for you and what improvements you need to make on it.
The most important aspect of your statement is the cash. This includes cash in checking and savings accounts, stocks and bonds, and the cash value of life insurance policies. Cash is critical in making sure you have money for when emergencies or other life events pop up and you need money to pay for them. It is extremely important to know how much cash you have and identify it in your personal financial statement.
Another important part of your statement is your personal property. This includes all of your “stuff”: cars, boats, art and furniture. List your personal property with an estimate of how much it is worth. Also pay attention to your retirement funds which include IRA’s, 401K’s, and Annuities. Always include your retirement savings in your financial statements.
Be sure to keep track of your current debts as well. This is anything you owe that is due in less than one year such as credit cards and loans. Other payables would include taxes and mortgage payments. It’s extremely important to know how much debt you have and to pay attention as to whether you have enough money to pay those debts off.
When you are looking at your personal statements it is critical to know how much money you have in savings and how much money you owe in debt. By paying attention to your financial statements you will have a better idea how to manage your money and avoid financial troubles. Learn how to manage and analyze your own financial statement and it make managing your money a lot easier.