How to make a personal monthly balance sheet step by step?

See the step-by-step guide to making a monthly personal balance sheet

---

Making a monthly personal balance sheet is very important to understand your true financial situation.

Stop for a second and think: do you know exactly how big your material possessions are? 

We are not talking about your monthly salary and other sources of passive income, but rather your personal wealth, which you have acquired over the years.

If you want to know what a personal balance sheet is, how it works, what it is for and how it can be done, keep reading. We will explain how it all works!

What is a monthly personal balance sheet?

The balance sheet is an accounting instrument that allows a person or a company to assess their true financial situation more clearly.

In the business world, the balance sheet is an essential tool, as it clearly shows the company's current situation, its growth capacity, debt, profitability, etc.

The logic is similar when you think about your personal finances.

After all, the financial balance sheet helps you better understand the investments you have made and your debts.

Basically, the objective is to make a survey of all assets and money available in the account.

Assets and rights: financial applications, real estate as an investment, personal assets, rights to receive and shares in companies.

Debts and obligations: loans, property financing or balance to be paid off, obligations and various compensations, among others.

---

How does the monthly personal balance sheet work?

Before anything else, it is important for you to know that this statement can be made in a table.

In other words, you can use good old Excel to carry out the survey and better understand your real financial situation.

By doing this, you will be able to see how much you have and how much you owe. The result will show whether the balance is positive or negative.

A positive result, in turn, demonstrates that assets exceed liabilities and that accounts are well organized.

However, if the result is negative, it means that your financial health is at risk.

After understanding and evaluating the situation, it is possible to think of new strategies and organize finances.

With a balance sheet, it is easier to evaluate your decisions regarding your money and whether there are changes that need to be made, both in the short and long term.

How to make a monthly personal balance sheet?

As we said, you can do this in an Excel table, since this tool is excellent for monitoring the balance and better understanding the results.

However, if you don't want to use it, you can make your notes and calculations manually.

So, start by creating your table, whether it is manual or not.

On the right side, you will list your assets, rights and money. On the left side, you will list all your debts, called liabilities.

List all your assets and the value of each (on the right side of the table).

To give an example of a personal balance sheet, let's consider that a person has the following assets:

• House: R$ 300 thousand

• Car: R$ 50 thousand

• Investments: R$ 20 thousand

The sum of all your assets, in this case, would be R$ 370 thousand.

However, you need to consider liabilities, that is, what you have not yet paid off and will have to pay in the coming months/years. Thus, we can include, for example:

• House: R$ 60 thousand

• Car: R$ 10 thousand

If your assets are financed, the amount of the remaining installments to be paid should be considered a liability, even if all payments are up to date. In the example above, the sum is R$$ 70 thousand.

To find out your true net worth, you must subtract the value of your assets from your liabilities. In the example above, the result is R$ 300 thousand.

---

How to make a more detailed personal balance sheet?

The more detailed the balance sheet, the better.

In fact, you can do this monthly, half-yearly or annually.

The level of detail can be even greater if you separate your high and low liquidity assets.

A highly liquid asset is one that allows you to withdraw money quickly, without losing value. A good example is investments in Selic Treasury.

On the other hand, when an asset has low liquidity, it means that turning it into cash can take a little longer. This is the case with real estate, for example.

---

Creating a personal financial plan: what is it and why do it?

Personal financial planning is basically a document that will help you organize your finances.

In other words, this way, you will be able to better manage your earnings and expenses.

From your personal balance sheet, you will know if you need to make any changes related to your financial life.

This could include, for example, a strategy for paying off a mortgage.

With financial planning, it becomes easier to understand your income, debts and the actions that must be taken to achieve your goals.

At this stage, it is also important for you to learn how to invest, so that you can increase your assets even further and maintain your purchasing power over the years.

---

How to make a personal financial plan?

First of all, it is important for you to understand that financial planning helps you understand your financial situation and define your short, medium and long-term goals..

Now that you understand the importance of making a balance sheet, see how to make a personal financial plan:

• Organize your budget

• Adjust your routine according to this information

• Plan to pay off your debts

• Find ways to save more

• Plan your goals

• Start investing your money

• Try to learn more about financial education

Conclusion

The monthly personal balance sheet is extremely important to better understand your current reality and, thus, make financial planning.

Because, by identifying and analyzing net worth, it is possible to think of strategies to increase it in the short, medium and long term.