Creating and maintaining your own Personal Financial Statement is useful for 4 main purposes: (1) Gaining a good financial education, (2) Creating and evaluating your budget, (3) Applying for business loans, and (4) Applying for personal loans. If you already know why you need one, and why you want to use Excel to create one, then go ahead and download the template below. If you’d like to learn more about it, continue reading this page.
This spreadsheet allows you to create and update an all-in-one personal financial statement that includes:
- Personal Balance Sheet – for listing assets and liabilities and calculating net worth.
- Cash Flow Statement – for listing all your inflows and outflows and calculating your net cash flow.
- Details Worksheet – for listing individual account balances and the details for your properties and loans.
- Info Sheet – for listing contact info that is typically required in loan applications (e.g. names and addresses of the applicant and co-applicant).
It also includes calculations for some common financial ratios:
- Basic Liquidity (BLR) Ratio = Total Liquid Assets / Total Living Expenses :: How many months can you live on your liquid assets without any income? This ratio uses info from both the balance sheet and the cash flow statement. It’s one of the really cool things that your PFS can tell you.
- Debt-to-Income (DTI) Ratio = Annual Debt Payments / Annual Income :: A ratio commonly used by lenders to determine how risky of an investment you will be. It should be below about 35% to be considered to have an acceptable level of debt. This comes from the cash flow statement.
- Debts-to-Assets Ratio = Total Liabilities / Total Assets :: Indicates the degree of leverage that is used by a person or company to finance their assets. The higher this ratio the less financial flexibility you have. This comes from the balance sheet.
Why is a PFS useful for creating and evaluating a budget?
If you have already created and follow a budget, your PFS is basically half done. A personal cash flow statement is almost exactly the same thing as a budget, except that a budget is a plan or projection, and your cash flow statement lists your actual earnings and expenses.
A cash flow statement helps you create your budget. Your budget helps you plan how you are going to allocate your net cash flow (hoping of course that your net cash flow is positive).
Why does a PFS help you increase your financial education?
Did you already know the relationship between a cash flow statement and a budget? It’s not that the PFS is going to teach you directly. The point is that to accurately complete your personal financial statement you are going to need to ask a lot of questions, and probably do a lot of Google searching, to figure out why such-and-such is a liability, or what exactly is an asset, etc.
Using the template will give you a big head start, but don’t assume that everything I’ve included in the spreadsheet is 100% correct or that it is organized optimally for your needs. Use it as a template – it is just a framework to help you get started. Verify all formulas and make sure you understand exactly how things are calculated.
Why is a PFS used in applying for loans?
A lender needs to evaluate the risk of lending money to you. One of the ways they do that is by analyzing your income and how much debt you currently have. They can get that information from your personal financial statement. If you are applying for loans, banks will likely have their own personal financial statement (PFS) forms for you to fill out (I’ve linked to a couple in the references at the bottom of this page). But, if you are already maintaining your own PFS in Excel, then that will make the process MUCH easier.