Personal Financial Statements
How Much Are You Worth?
How Much Are You Worth?
Personal Financial Statements or PFS for short, are normally required when providing any sort of company loan documentation, applications for business credit or leases, etc. Just about all of our clients we serve at some point needs one completed. Most clients are in the dark when it comes to preparation. Also, it is VERY important to have an experienced professional look your PFS over before you submit to anyone. A PFS is actually an affidavit and could have adverse consequences if any erroneous information is used, depending on the circumstance. A personal financial statement is a serious inquiry into your life and some of the questions do not or should not be answered.
Net worth analysis is specifically important for providing insight on what an individual can achieve in regard his or her finances in the future. Proper measurement of the personal net worth of an individual can help the bank, lender, landlord, etc. make a determination on your application.
In particular, net worth is required when applying for small business loan applications. Net worth from your PFS is also a requirement for loans with a guaranty. Since each net worth client has a completely different set of stipulations, we charge a very low hourly rate to prepare. Most PFS are less than $100. Last year we successfully helped over a dozen clients.
Spend Wisely
When you know how much you are really worth, you will be able to spend your income wisely. To cut your coat according to your cloth, you must first know how much you are worth and then, you will be able to determine how much you have to spend now to secure a better future
Save and invest
After spending your income wisely, you will likely save money which can be invested into some other properties.
Cut down liabilities and debts
With the knowledge of how much you are worth, you will identify liabilities and debts that are affecting your finances and cutting down them down becomes easier.
How to Measure Your Net Worth
To measure your net worth, there are basically three (3) steps involved and they are:
Your assets are the properties that you own and they include:
Your liquid net can also be included under your assets when measuring your personal net worth. Liquid net includes investments such as mutual funds and stocks.
Your liabilities are the amounts of money you owe which must be paid in the future. Some of the common liabilities are:
Calculate your net equity
Your net equity is the value of the assets you own minus the value of the liabilities you owe. The result of your net equity will determine your worth. If the result is positive, it means your finances are healthy, but a negative result shows that your liabilities are more than the value of your assets and your finances are depleted.
Though measuring the value of your net worth could look very easy on paper, it is quite difficult to calculate; therefore, you need the service of trained professionals to get the right value of your net worth. Our experts at EC3 are here to help you with documenting your worth statement and advising you on how to manage your finances.