Personal Balance Sheet

That which is measured improves.

The one tool I wish I had when I made my first dollar was a balance sheet.

But I didn't create a balance sheet until I was 37. But since I started measuring my assets and my liabilities five years ago, my net worth has nearly 10X'd. Watching net worth grow by measuring my assets and liabilities is pretty amazing.

So, what goes into a balance sheet?

On the left side of the balance sheet list your assets from most liquid to least liquid.

An asset is something you own.

Liquidity is how easily you can turn the asset into cash. Cash is most liquid. Real property (like your house) is least. This suffices for most people.

On the right side of the balance sheet list your liabilities from shortest term debt to longest term.

A liability is something you owe on.

Short term debt includes credit cards and personal loans. Long term debt includes auto loans, medical debt, and mortgages. This suffices for most people.

Also on the right side of the balance sheet below the liabilities you calculate your net worth.

Net Worth = Assets - Liabilities -- OR -- as a "Balance Sheet" Assets = Liabilities + Net Worth.

In other words, your Total Assets equals your Total Liabilities plus your Net Worth. If these do not equal, you are not balanced and you need to reevaluate your balance sheet.

If you have not created your balance sheet open Excel or Google Sheets and get started today.

To jump start your balance sheet, download this Google Sheets Personal Balance Sheet today!