Hi mark Kohler here, let's talk about building a personal financial statement now
This is a really important procedure tool
It's gonna help you in a lot of different ways and I'm not talking about a business
Financial statement with a profit and loss and balance sheet and all that that's it another video for another day
Bringing in QuickBooks into the mix and all the bookkeeping that comes with that
But there's gonna be a lot of times where you need to build a personal financial statement
Maybe for a bank loan your kids are applying for FAFSA
You're going into a new business venture a bank is asking one for
Credit line who knows but having a good financial statement at your fingertips can help you succeed in business
And it's going to help you look a lot more professional
So let's dive into it
Now a good place to start is what a typical financial statement looks like then we can put it in perspective
so if you have a business you're gonna have what's called a profit and loss and
you're also going to have a
balance sheet
and this is really typical of a small business with a good set of books and it all ties out new accountants know what I'm
Talking about this is a typical set of financial statements, but when you're talking about a personal financial statement
Let me tell you what the bank wants they want a balance sheet
This is what they're focused on they're gonna find what your income is when you declare your income
Maybe even show your tax return. Where do you have a w-2 do some small business income k1, whatever?
That's gonna
come in a separate form
But what they're looking for in a personal financial statement is a balance sheet now another word for balance sheet is your net worth
Now you're gonna build this financial statement in Excel and for those that are interested you can email me below
And I'll give you a free template just something in Excel that you can use to set up your personal financial statement
So just email mark at Mark J
Kohler com it's down there below and say please send me your free template for a balance sheet or a personal financial statement
Just put it in the subject line. We'll hook you up
But you're going to build us in Excel and you're gonna want it in Excel so you can adjust the numbers
Do the math for you so this net worth or personal financial statement
or
Balance sheet all these terms are all synonymous with
Kind of the same thing and really what its gonna look like and it's so easy your people are gonna love
This is basically you're gonna put your assets
minus your liabilities
and
Then that's going to equal your net worth
Now that's kind of down and dirty simple, and then there's some other ways to look at this from an accounting standpoint
Okay, now that you have the basic structure that counts that are the bankers are gonna want to zoom in on a few things so
For assets you're gonna provide a little more detail you're gonna provide current assets
Which might be bank accounts or stock you might own, and then kind of long term assets, which could be land
buildings your home and
Maybe even business as you own, but when you list all these you're gonna put their fair market value
What not what you paid for them?
What are they worth right now if you were to sell him tomorrow of course bank accounts in stock, that's gonna be easy
But you have to give kind of a good fair market value analysis or basis for what they're worth right now
I don't care what you paid for him again. We're gonna put fair market value dollar amounts and you're gonna put them all in here
Don't worry about liabilities yet you may put your home in here my homes worth 300 grand
But there's a mortgage on it for 280. That's gonna come later
Just put all of your assets here in in all the different forms and fashions
And then we're gonna come up with a total total assets fair market value
Next the same thing applies for your liabilities you're gonna look at current liabilities like credit card debt
Auto loans things like that and then long-term, debt, which might be mortgages on
The land or home that you own and a lot of times
It's good to time together
so you on the asset side you might put Auto number one auto number two or
Home number one home number two and then down here put liabilities
Loan for auto one loan for auto two loan for building one, or house one or whatever?
so that way
a baker or some
Reviewing this can looking ok these liabilities are tied to that and then you're gonna list the current balance on any of these liabilities
And that's gonna add up
And you're gonna have your balance of all the liabilities that you have now in the end here you're gonna
Take your assets minus liabilities, and that's gonna give you your net worth you kind of back into it
and and this is pretty easy because again accounts are gonna look at this and go oh my
Liabilities and net worth combined equal my assets because assets minus liabilities
Equal net worth now that might take a minute to sink in but when you're playing in Excel you're gonna get it
Because if I have a million dollars in assets
Minus eight hundred thousand and liabilities that means my net worth is two hundred thousand well two hundred thousand plus 800 equals my assets
So you can kind of do some basic math?
This is why you went to fifth grade to learn some math now the goal here is is that you have a positive net worth?
you're in the black right so a million dollars worth of assets eight hundred thousand and
Liabilities and your net worth is two hundred thousand
So you're in the positive and usually you put a couple lines on there below so when I email you a template you're gonna see
This and I'll give you some ideas of what those normal assets and liabilities would be now heaven forbid you're negative
Meaning you've got
1.2 million dollars in liabilities meaning you're negative now, you're in the red, which we don't want to be in the red
But that would be kind of a little parenthesis here
And you're two hundred thousand dollars in the red so you have a negative net worth not good
So we want to work towards positive net worth now in summary. This is a great document
you should always have on hand and it probably should go into your
Estate planning binder where you have your trust and will may be where your tax returns are
copy once the route every time you do one put a new copy into your
Fireproof safe with these documents. This is what we do at our law firm
we're trying to keep things simple and affordable for our clients where they have their their assets and
Liabilities set forth on a financial statement, they've got their wills and trusts. They've got their tax returns
Maybe they're all in a little digital flash drive, and they're in a fireproof safe
And you've got your corporate book for your LLC in a corporate book for your corporation
Guys when you're organized like this it brings a major piece of and comfort to your life
So that things aren't all scattered out there trust me. It'll help you be a better business owner and better
Live your American dream when these types of things are organized in at your fingertips
So your homework this weekend work on a financial statement it may be very
Surprising where things stand hopefully in a good way for you and your family
And as you're trying to build that well so get in there get a financial statement done and send me an email
And I'll send you a template that'll help you get there Thanks
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