| Quite often when you borrow money from the bank you are asked to provide a personal balance sheet together with your business set of financial statements. Interestingly many of us are left wondering what this means and feels that they should give as low as information as they can possibly afford.
So then what is a personal balance sheet. A personal balance sheet is a list of the assets and liabilities that you own at a personal level. It should only reflect what you own as a person not what you have in the business.
A personal balance sheet should fairly represent what you own. The preparation should be as simple and as inclusive as possible so that there is revelation of all the facts pertaining to your personal wealth. At every level your balance sheet should be able to reflect you as growing, dormant or retrogressing.
Your personal balance sheet should show the following:
- The long term immovable assets that you have, their location, whether under lease or tribal, developed or not developed and the fair value of the same
- The movable assets e.g. motor vehicles. Indicate the model, registration number and value
- House hold furniture and equipments and their approximate values
- The surrender values of your life insurance policies if any
- Livestock that you own, differentiating between goats and cattle and their approximate values
- List your investments in the quoted market and otherwise at their current market rates
- Show your bank account balances as at the date you are making the personal balance sheet
- Indicate the money owed to you by people you relate with as debtors
- Out line stocks held e.g. for products like foods and agricultural products
- List the all the liabilities which have financed the above assets, both long term and the short terms loans and other creditors.
Finally remember to initial your signature and date your personal balance sheet. It is a very important item in revealing your net worth. |
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