Understanding & Evaluating Your Personal Financial Statements

We often think of financial statements in the context of the business world where they are common place and are frequently used to gauge financial performance, determine a company’s value, satisfy bank and loan requirements, aid in strategic planning, amongst a host of other uses, the list is endless.

On the flipside, we will focus on personal financial statements, where many of the financial statement metrics that are utilized in the business realm also apply.

What are Personal Financial Statements?

Personal financial statements generally refer to a document or spreadsheet that highlights an individual’s financial position at a given point in time. The statements include information about the individual, such as name and address, along with a breakdown of total assets, liabilities, and net worth. Personal financial statements may also include a personal income statement and personal statement of cash flows. In addition, banks and other lenders often require an individual to submit their personal financial statement information on a banking document, which is used in conjunction with a loan application to assist the lender in determining the borrower’s ability to repay the debt and determine the applicable interest rate charge.

What are they used for and what benefits do they provide?

In addition to obtaining loans, personal financial statements are also utilized for:

  • Understanding the overall state of your personal financial condition and net worth
  • Budget planning
  • Setting goals and tracking them to increase your overall wealth
  • Collecting all your data into one location to track progress
  • Provide a document for your loved ones in the event something happens to you

Key Takeaways

Approach your personal finances as you would any successful business, avoid guessing where you stand, focus regularly on performance, comparing budget goals with actual results and analyze personal desired growth in your net worth year over year. Knowing and understanding your personal financial performance can assist you in reaching your personal financial goals. Watch for Part 2 of this blog coming soon, as we will take a deeper dive into creating a set of personal financial statements.

For more information, contact Joseph M. Becht, CPA, CGMA, Senior Manager at Tronconi Segarra & Associates LLP at 716.633.1373 or


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