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Finance Personal Statement Examples

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• Finance Personal Statement Examples

Here are two finance personal statement examples from some of the best students in undergraduate and postgraduate programmes. Both examples you can use as inspiration and motivation to write your own personal statement for university . 

Finance Personal Statement

Ever since I discovered my passion for the finance industry at a young age, I have been determined to pursue a career as a financial consultant and advisor. It is this unwavering ambition that has led me to apply for the MSc course in Finance at the esteemed London School of Economics and Political Science (LSE). I firmly believe that this course will provide me with the necessary tools and knowledge to achieve my career goals by expanding my understanding of financial products, the intricate workings of financial markets, and investment banking.

The reputation of LSE as a university of academic excellence is one of the key reasons for my decision to apply. I am aware of the university’s ability to equip students with critical analysis skills that are essential for becoming leaders in their chosen sectors. Moreover, being located in the heart of London provides unparalleled opportunities for networking and professional development in the world of business and finance. The course’s comprehensive approach, which strikes a balance between theoretical and practical modules, is also highly appealing to me.

My educational background in accounting has laid a solid foundation for my advanced studies in finance. Through my coursework in accounting, I have developed strong numerical skills and gained practical experience in management accounting and reporting roles within financial firms. It was during my studies that I discovered a particular interest in Strategic Financial Management, where I was introduced to financial products such as equities, derivatives, fixed income, and bonds, along with their significance in financial markets. Building on this knowledge, I have become a qualified accountant and have gained valuable work experience as an Associate at Deloitte, where I am part of the project management team, responsible for decision support. This role has honed my ability to work under pressure and within tight time constraints, allowing me to meet urgent and conflicting deadlines.

To stay up-to-date with the dynamic financial market, I avidly follow financial news through subscriptions to reputable media platforms such as the Financial Times, the Economist, and Bloomberg. Additionally, I engage in various hobbies such as travelling, watching movies and documentaries, and reading to broaden my knowledge and stay informed about current affairs. As a sports enthusiast, I follow tennis, football, boxing, and Formula One racing. These diverse interests have cultivated qualities such as ambition, intuition, focus, and self-discipline, which drive me to excel in any endeavour. I value the input and opinions of others, making me an effective team player, while also possessing the independence and initiative to work autonomously. I firmly believe that these qualities will contribute to my success as a finance analyst and enable me to excel academically.

Looking toward the future, I aspire to establish a reputable financial consulting firm in my home country, Nigeria. This firm would provide a range of financial services to both companies and public institutions. I recognise that achieving this goal will require years of experience, cultivating the right connections, and personal determination. Pursuing an MSc in Finance from LSE will better equip me to manage corporate, strategic, and financial opportunities, while also providing the opportunity to learn from talented professors and compete with exceptional graduates. I am convinced that this course is a crucial step toward realizing my long-term aspirations.

The increasingly evident impact of financial risk on our world has captivated my interest like never before. The interplay between the financial sector, government, and the general public dominates news stories, emphasizing the significance of understanding the industry. With my passion for finance nurtured from an early age, I have dedicated myself to attaining a comprehensive understanding of both the theoretical and practical aspects of global finance through high-level studies and extensive work experience in diverse industrial and international contexts.

Currently, in my fourth year of a degree in Finance, Risk, and Investment at Caledonian University, I have developed a strong foundation of knowledge in the field. Moreover, I have delved deeper into specific areas

Finance Personal Statement Example

Since my early years, extensive international travel has shaped my perspective on the world, particularly the stark economic contrasts between the ‘Third World’ and the ‘Western World.’ Having the privilege of experiencing different cultures and economies through my parents, who have lived in Africa, Europe, and the USA, I have developed a deep curiosity about the mechanisms that drive global economies. This curiosity has led me to pursue Economics at A Level, as I believe it is at the core of world discussions and can provide a comprehensive understanding of current news articles and their correlation to the subject.

Through my readings, such as Tim Harford’s ‘The Undercover Economist,’ I have come to appreciate the analogy that economics is like engineering, offering insights into how things work and the consequences of changing them. I see economics as an intricate puzzle, requiring economists to integrate economic theories with government policies to solve complex economic problems. Attending conferences at prestigious institutions like the University of Warwick and Oxbridge has broadened my perspective on economics, with theories like Freakonomics intriguing me and sparking a desire to explore the unexpected links between seemingly unrelated phenomena.

My passion for economics is complemented by a strong affinity for mathematics , which has been nurtured since my childhood. From playing mental maths games to tackling complex problem-solving at A Level, I have developed analytical abilities that were put to the test during a taster day at Cass Business School. Through quick thinking and effective teamwork, I excelled in a trading shares simulation, resulting in my group being the most profitable. Furthermore, my participation in a business management enterprise day at the University of the West of England allowed me to showcase my skills, leading to the recognition of the ‘Best Business Idea.’

To gain practical experience in the finance sector, I sought work opportunities that would provide me with invaluable insights. My time at Britannia Building Society exposed me to the inner workings of retail banking, allowing me to shadow the branch manager, work closely with financial planning advisors, and handle transactions at the tills. This experience introduced me to financial assets, including options for investing in bonds, shares, and increasing savings. Additionally, working at Harrison’s Accountancy and Insolvency Agency gave me valuable knowledge about liquidations and insolvencies of businesses, further solidifying my interest in pursuing a career in finance.

Staying updated with current financial affairs is crucial to me, and I regularly read the economy sections of reputable sources such as the BBC website and The Economist. Subscribing to a weekly update from RBS provides me with topical developments in the financial markets. Alongside my commitment to academic and professional pursuits, I have also developed essential skills through my job at O2 Retail. This experience has sharpened my interpersonal skills and honed my ability to negotiate mutually beneficial deals for both customers and the company. As a captain of my football team, I have learned the value of leadership, motivation, and maintaining high team morale, skills that have translated into success in class debates and the trading shares simulation at Cass Business School.

During a recent trip to Switzerland, I had the opportunity to meet with the assistant vice president at Credit Suisse, who shared insights into exchange rate processes within a leading investment bank. These conversations further solidified my understanding of the close relationship between economics and the finance sector.

Through a comprehensive study of Level Economics and practical experiences, I have been able to bridge the gap between theory and real-world situations. Engaging with professionals in the field has deepened my appreciation for the vital connection between economics and finance. I am confident that pursuing a university education will equip me with the necessary knowledge and skills to navigate the dynamic and fast-paced world of financial markets.

My passion for finance and economics was sparked by the Lehman Brothers’ bankruptcy and the subsequent financial crisis when I was 21 years old. The events of that

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Personal Financial Statement: Definition, Uses, and Example

What Is a Personal Financial Statement?

The term personal financial statement refers to a document or spreadsheet that outlines an individual's financial position at a given point in time. The statement typically includes general information about the individual, such as name and address, along with a breakdown of total assets and liabilities . The statement can help individuals track their financial goals and wealth, and can be used when they apply for credit .

Key Takeaways

• A personal financial statement lists all assets and liabilities of an individual or couple.
• An individual's net worth is determined by subtracting their liabilities from their assets—a positive net worth shows more assets than liabilities.
• Net worth can fluctuate over time as the values of assets and liabilities change.
• Personal financial statements are helpful for tracking wealth and goals, as well as applying for credit.
• Although they may be included in a personal financial statement, income and expenses are generally placed on a separate sheet called the income statement.

Understanding the Personal Financial Statement

Financial statements can be prepared for either companies or individuals. An individual’s financial statement is referred to as a personal financial statement and is a simpler version of corporate statements . Both are tools that can show the financial health of the subject.

A personal financial statement shows the individual's net worth —their assets minus their liabilities—which reflects what that person has in cash if they sell all their assets and pay off all their debts. If their liabilities are greater than their assets, the financial statement indicates a negative net worth. If the individual has more assets than liabilities, they end up with a positive net worth.

Keeping an updated personal financial statement allows an individual to track how their financial health improves or deteriorates over time. These can be invaluable tools when consumers want to change their financial situation or apply for credit such as a loan or a mortgage . Knowing where they stand financially allows consumers to avoid unnecessary inquiries on their credit reports and the hassles of declined credit applications.

The statement allows also credit officers to easily gain perspective into the applicant's financial situation in order to make an informed credit decision. In many cases, the individual or couple may be asked to provide a personal guarantee for part of the loan or they may be required to put up collateral to secure the loan.

Special Considerations

A personal financial statement is broken down into assets and liabilities. Assets include the value of securities and funds held in checking or savings accounts , retirement account balances, trading accounts , and real estate. Liabilities include any debts the individual may have including personal loans, credit cards, student loans, unpaid taxes , and mortgages. Debts that are jointly owned are also included. Married couples may create joint personal financial statements by combining their assets and liabilities.

Income and expenses are also included if the statement is used to attain credit or to show someone's overall financial position. This can be tracked on a separate sheet or an addendum, called the income statement . This includes all forms of income and expenses—typically expressed in the form of monthly or yearly amounts.

The following items are not included in a personal financial statement:

• Business-related assets and liabilities: These are excluded unless the individual is directly and personally responsible. So if someone personally guarantees a loan for their business—similar to cosigning —the loan is included in their personal financial statement.
• Rented items: Anything rented is not included in personal financial statements because the assets aren't owned. This changes if you own the property and rent it out to someone else. In this case, the value of the property is included in your asset list.
• Personal property: Items such as furniture and household goods are typically not included as assets on a personal balance sheet because these items can’t easily be sold to pay off a loan. Personal property with significant value, such as jewelry and antiques, may be included if their value can be verified with an appraisal .

Business liabilities are only included in a personal financial statement if an individual provides the creditor with a personal guarantee.

Keep in mind. Your credit report and credit history are big considerations when it comes to getting new credit and every lender has different requirements for issuing credit. So, even if you have a positive net worth—more assets than liabilities—you may still be refused a loan or credit card if you haven't paid your previous debts on time or have too many inquiries on file.

Example of a Personal Financial Statement

Let's assume that River wants to track their net worth as they move toward retirement . They have been paying off debts, saving money, investing , and are getting closer to owning their home. Each year, they update the statement to see the progress they have made.

Here's how they would break it down. They would list all their assets—$20,000 for a car, $200,000 for their house, $300,000 in investments, and $50,000 in cash and equivalents . They also own some highly collectible stamps and art valued at $20,000 that they can list. Their total assets are, therefore, $590,000. As for liabilities, River owes $5,000 on the car and $50,000 for their house. Although River makes all of their purchases with a credit card, they pay the balance off each month and never carry a balance. River cosigned a loan for their daughter and $10,000 remains on that. Even though it is not River's loan, they are still responsible, so it is included in the statement. River's liabilities are $65,000.

When we subtract their liabilities from their assets, River's net worth is $525,000. Although they use it mainly to track their financial health, River can use this information—and the statement as a whole—if they want to apply for any other credit.

Small Business Administration. “ Personal Financial Statement .” Pages 2-3.

Experian. “ What Happens If Your Loan Is Denied? ”

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Guide to Better Finance Master’s Personal Statements

Table of Contents

A  Finance master’s personal statement  is an essay crafted by a prospective student applying for a master’s degree. 

The statement’s purpose is to provide insight into the applicant’s personality and how they can contribute to the program. It also demonstrates their experience and expertise in the field. 

Applicants should tailor their personal statements to each specific university and their unique requirements. This will help make it stand out from those of other applicants.

The Importance of a Personal Statement

Personal statements aren’t redundant. While applications and resumes already enumerate an applicant’s qualifications, the main advantage derived from personal statements lies in compelling exposition. 

The exposition of your qualifications matters significantly. It can influence the impression you establish on readers. Moreover, it allows you to highlight specific skills and experiences to paint yourself as a prime candidate.

Personal statements are also a way to demonstrate a genuine dedication to mastering the subject or course . 

The best thing about personal statements is that they are reasonably straightforward despite their value. The following section provides a few tips for crafting effective personal statements.

Tips for Writing a Finance Masters Personal Statement

Highlight Your Finance Accomplishments and Knowledge

Explain how your experience has given you a unique perspective on the subject. Showcase your achievements and competencies, such as internships or volunteer work related to Finance. These will show your passion for the industry and your dedication to learning. 

Reference Research Experience

Referencing any related studies you’ve conducted or written about demonstrates your industry exposure. This will show that you are equipped to succeed in an advanced program and shows your hunger for knowledge. 

Use Concrete Examples

Concrete examples are valuable because they are a reliable basis for your general performance. Include a few to support any skills, characteristics, and values you claim to possess. 

Add an Opportunity Statement

Explain how a Finance Master’s degree can benefit your career, business, or academic life. Show your readers the allure that led you to pursue a Finance Master’s degree in the first place. This is valuable information because it gives admissions board representatives and recruiters a glimpse into your motivations.

Write With Clarity and Structure

To craft a clear, structured statement, you must use active language, well-rounded sentences, appropriate transition words, and utilize common English idioms when applicable. Avoid sounding overly robotic or overusing technical jargon. Let your personality shine through while demonstrating your mastery of the material.

This ensures you deliver a clear message and keeps your reader invested in your personal statement from the first sentence to the last.

If you’re still struggling with writing a  Finance Masters personal statement , don’t fret. Here are a few examples you can gain inspiration from.

Sample Finance Masters Personal Statement

I am an experienced professional with a decade of experience in the financial industry. I have always been passionate about pursuing further education to ensure I stay at the highest level of the market. Last year, I pursued a Masters’s degree in Financial Management (M.Sc.) from an internationally renowned school. 

I wanted to gain a better understanding of this area and expand my knowledge of economics and accounting principles. This will help me develop greater capability in dealing with processes in the ever-changing global environment. 

By taking up this degree, I will also have the opportunity to sharpen my skills through various job roles. I will also gain access to professionals who can provide real-world insight into the area. 

Moreover, My ability to apply within any business setting sets me apart from the rest of the market. I have a strong service orientation and focus on developing innovative solutions. These are qualities that are essential to excel within the management sector. After completing my M.Sc., I would be more than ready to take on future challenges and deliver excellent results.

I come from an international background and have been immersed in investment banking for the past six years. My work experience and Business undergraduate degree create a solid financial knowledge foundation. I want to build upon this foundation, so I seek an MSc in Finance. I recognize the need for more formal training to reach my long-term goals in the finance sector. 

Through my experiences, I believe I understand the challenges faced in working within the global banking system. I have become adept at anticipating and dealing with potential problems as they arise. My current role requires that I be able to analyze different markets and predict outcomes accurately. I feel confident doing this after having undertaken significant research in this area. 

Additionally, I manage portfolios and negotiate deals between clients and other businesses, a task further enhanced by my fluency in English and Spanish. 

I relish the opportunity to further develop my understanding of Finance through a Master’s program. It will allow me to explore new topics like derivatives trading and financial engineering. I also look forward to pushing myself academically and developing professional connections. These networks could be vital when it comes time to pursue my career aspirations. 

This course offers me the chance to gain the skills needed to do precisely that. Pursuing an MSc in Finance is the right decision for me.

I believe my qualifications in Financial Economics and varied work and activity exposure make me an ideal candidate for a Master’s Degree in Finance. During my time at school, I learned the fundamentals of business finance and economics as well. I build on this by reading content from some of the world’s leading financial institutions. 

My success in these areas allowed me to skip a grade, giving me more time to pursue extra-curricular activities. I worked with a small company in India that specializes in financial consulting. This hands-on experience gave me great insight into corporate Finance’s complexities. It also helped me develop good communication skills and sharp problem-solving abilities. 

I am excited to use my knowledge, expertise, and experiences to advance my understanding of the financial industry further. As a student, I will be committed to maximizing my potential by taking advantage of every opportunity the university offers. By working hard and combining real-life examples with classroom learning, I aim to establish myself as an engaged and capable student. Upon graduation, I can become a valuable asset to any financial organization or institution.

Personal statements are vital to Master’s applications and other selective ventures because they express your best qualities . Mastering the art of crafting compelling personal statements will help you go far in your academic and professional experiences. Make sure to apply our tips to maximize your chances of success. Good luck!

Abir Ghenaiet

Abir is a data analyst and researcher. Among her interests are artificial intelligence, machine learning, and natural language processing. As a humanitarian and educator, she actively supports women in tech and promotes diversity.

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Sample Personal Statement Finance (MIT Sloan)

by Talha Omer, MBA, M.Eng., Harvard & Cornell Grad

In personal statement samples by field | personal statements samples by university.

Here is the personal statement of an applicant who got admitted to MIT Sloan’s  Masters in Finance program . For personal statement, Sloan poses several questions to applicants, which the admissions committee expects to be answered in an essay form. MIT provides these personal statement prompts to encourage students to self-reflect and then to share their insights with the program. 

The following essays are an example of a compelling story and reflect the original voice and personality of the applicant. Get inspiration from them and try to incorporate their strengths into your own personal statement.

In this Article

Personal Statement Prompt 1

Personal statement prompt 2, personal statement prompt 3.

Please discuss past academic and professional experiences and accomplishments that will help you succeed in the Master of Finance program. Include achievements in finance, math, statistics, and computer sciences, as applicable. 

As an ardent finance student, I have always sought opportunities to develop a solid grounding in the subject.

During my undergraduate, I successfully co-founded a philanthropic long/short Impact Investment Hedge Fund, “Australian Students Asset Management” (ASAM). The fund secured firms like Goldman Sachs to provide pro-bono services and mentorship. In addition, I developed a proprietary ESG algorithm to identify investment opportunities per our social development mandate. As a result, our investments have consistently outperformed our benchmark. Furthermore, I attended two courses at LSE on Alternative Investments and Financial Risk with “A” grades. This involved in-depth exploration of topics like Monte Carlo, Bootstrapping, Financial Modelling and Stratification.

As an Associate at PwC, I created PwC’s first fully automated valuation process. This consisted of using industry-specific valuation templates using Python and VBA for data scraping. This solution saw significant savings for the firm and is now used by PwC throughout the world.

As an analyst with Barclays Capital, a Global Quantitative Hedge Fund, I gained exposure to arbitrage trading strategies by implementing statistical principles like mean reversion, volatility trends and co-integration in Python. This helped me develop successful trading algorithms yielding a highly desirable annualized return of 33%.

Describe your short-term and long-term professional goals. How will our MFin degree help you achieve these goals?

My short-term goal is to return to Australia and establish my own quantitative “for-profit” hedge fund. I will utilize my previous experience co-founding the philanthropic hedge fund, ASAM, to that effect. My long-term goal is to expand this hedge fund’s operations overseas and invest in the North American markets, as they present significant growth opportunities.

At MIT, I am eager to research the implications of current trends in institutional capital flows. This detailed exploration will enhance my understanding of the potential risks of passive investing and provide an edge in building trust with future investors.

As an Analyst at Barclays Capital, I developed event-driven and relative-value trading algorithms using Python. With the MFin, I will create an advanced, intuitive approach to data science problems, enabling the manipulation of alternative data sets to automate trading decisions and executions. The Advanced Analytics and Data Science courses and Analytics Certificate are especially exciting as they will allow me to understand shallow models and train deep neural networks in an economic context. I also hope to improve my technical skills around asset pricing and general dimension reduction techniques and ensemble methods which are critical to forming accurately priced derivatives.

Please share personal qualities that will enable you to contribute to the advancement of our mission.

THE MISSION

The mission of the MIT Sloan School of Management is to develop principled, innovative leaders who improve the world and generate ideas that advance management practice.

I believe success as a Leader requires one to have a passion for taking the initiative, thinking outside the box and persevering in adversity.

These traits have always been integral to my personal and professional pursuits, including my recent experience as a special education teacher in San Pedro, a rural village in Costa Rica. I was required to develop creative methods to overcome the language barrier and constructed visual aids from cardboard pieces to make block numbers. In addition, the school had a dire need for wheelchairs, so I devised a cost-effective design to repurpose old bicycles into wheelchairs that we implemented as a team. My commitment to improving the world through innovation will allow me to contribute actively to MIT’s mission.

Furthermore, my extensive involvement in boxing has enabled me to develop perseverance and increased focus in facing challenges. My first loss was devastating, and I considered giving up the sport, as my goal had been to maintain a perfect record. Ultimately, increasing training intensity, dance classes and the strong support from my team allowed me to win my next match and achieve the Most Improved Fighter award by the Sydney Boxing League.

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Do you want to create a personal financial statement, but aren’t sure where to start?

According to Mint.com , over 65% of people have no clue how they spent money last month. So, you can probably be pretty sure even less know how their personal finance situation.

With rising costs for essentials like housing and education due to inflation, there is no better time to get an accurate picture of your current situation today.

If you’re wondering how your finances measure up, a Personal Financial Statement can be an invaluable tool in helping you understand where you stand financially and prepare for changes ahead.

This article will walk through creating a sample personal financial statement template with examples of what this document might look like based on your situation.

A personal financial statement isn’t just for your loan applications anymore, it’s an opportunity for transparency in your finances too!

What is a personal financial statement?

A personal financial statement is a document that summarizes your assets, liabilities, and net worth. A PFS can help you understand your financial health so you can make informed decisions about your money.

A personal financial statement template will typically include three sections:

• Assets: This section will list all of the money and property you own.
• Liabilities: This section will list all of the money you owe.
• Net Worth: This section will calculate your net worth by subtracting your total liabilities from your total assets.

Your personal financial statement should be updated on a regular basis, typically once a year. This will help you track your progress and make sure you’re on track to reach your financial goals.

What are the benefits of creating a personal financial statement?

There are many great benefits of a personal financial statement.

By creating a personal financial statement, you can see at a glance how much money you have coming in, going out, and what your net worth is. This information can be extremely helpful in making financial decisions and setting goals.

Benefit #1 – Understand Your Financial Situation

This is why you must spend the extra couple of minutes to create a personal financial statement form.

Most importantly, you get a better understanding of your financial situation. This includes seeing where your money is going each month and how much debt you have.

What we call around here at Money Bliss – the 1000-foot look from above. The outsider’s perspective of what is going on with your finances.

Benefit #2 – Helps you track your progress

When it comes to personal finance, one of the best things you can do is keep track of your progress.

Tracking your progress should be important to you! By seeing everything laid out in front of you, it becomes much easier to make informed financial decisions that will help improve your overall financial picture.

Benefit # 3- Find some areas of improvement

Since a personal financial statement is a document that summarizes your income, expenses, assets, and liabilities in one place it helps you see the financial big picture. Thus, spotting areas for improvement are easier.

For example, if you see that you are spending too much money on non-essential items, you can make changes to improve your financial health.

Benefit #4 – Useful Tool to Set Goals

Next, it can help you set goals. Once you see where you stand financially, you can set goals for paying off debt or saving more money each month.

This aids you to make better financial decisions by providing a clear picture of your financial situation.

Benefit #5 – Snapshot to help you stay motivated

Creating a personal financial statement can be incredibly helpful in staying motivated to save money and achieve your financial goals. Seeing your progress in black and white (or, more accurately, green and red) can be a strong motivator to keep going.

Using a personal finance statement is especially helpful if you’re working towards paying off debt or saving for a specific goal. It can be difficult to stay motivated when you’re not seeing progress, but seeing the numbers going down (or up) can give you the boost you need to keep going.

Benefit #6 – Monitor your financial health

Creating a personal financial statement can help you monitor your financial health and make informed decisions about your spending and saving habits.

• If you see that your expenses are consistently exceeding your income, for example, you may need to make some changes to ensure that you are able to meet your long-term financial goals.
• Easier to spot opportunities to save money or invest in assets that will grow in value over time.

Monitoring your financial health on a regular basis can help you avoid debt problems and keep track of your progress toward financial goals.

What are the types of personal financial statements?

A personal financial statement is a form or spreadsheet detailing a person’s overall financial health. This statement is typically used to apply for business loans or other forms of financing. There are two types of personal financial statements:

• The first type is the balance sheet, which lists a person’s assets and liabilities.
• The second type is the income statement, which details a person’s income and expenses.

The balance sheet provides an overview of a person’s financial situation at a particular point in time, while the income statement shows how much money a person has coming in and going out over a period of time.

Both types of statements are important in helping lenders evaluate a borrower’s ability to repay a loan. As well as for you to monitor your personal situation.

What are the components of a personal financial statement?

A personal financial statement is not just a document that shows how much money you have in your bank account. It also includes other important components to show a well-rounded picture.

Most people know that a personal finance statement includes income, assets, and liabilities. But did you know there are actually four main components of a personal financial statement?

A personal financial statement varies from a traditional balance sheet that is used for a company.

Your income is everything you earn in a year from all sources, including your job, investments, alimony, and more.

You should list all of your sources of income on your personal financial statement so you have a clear picture of what you’re bringing in each month.

• Include all sources of income, even if they are irregular or one-time payments.
• List after-tax income.
• If you are married or have a partner, include their income as well.
• Update your income regularly to reflect any changes (e.g., new job, raise, bonus).

This will help you make informed decisions about your spending and saving.

This is the money you spend each month on things like your mortgage or rent, car payments, groceries, and other necessary expenses.

Here are over 100 personal budget categories for various expenses.

Assets are everything you own like your home equity or the value of your car and can use to pay your debts. This includes cash, savings, investments, property, and possessions.

Calculate your total assets by adding up the value of all your cash, savings, investments, property, and possessions.

So, is a car an asset ? Well it depends if there is a loan against it.

Liabilities

Your liabilities are everything you owe money on. This includes, but is not limited to:

• Student loans
• Credit card debt
• Any other personal loans

Your liabilities also include any money you may owe in taxes.

How to create a personal financial statement – Part 1

There are a few key things you need to know in order to create a personal financial statement.

The first part includes what is needed for your net worth – assets and liabilities. The second part includes your current income, expenditures, and savings.

We will show you next how to collect all of this information, then you can start to work on creating a personal financial statement.

Step #1 – Determine your current assets and business profit

The first is your current assets. Your assets are everything you own and can use to pay your debts. This includes your savings, your home equity, and any investments you have. You will need to know the value of all of these things in order to create an accurate personal finance statement.

To determine the value of your assets, start by looking at your savings. This can be any money you have in the bank, including checking, savings, and money market accounts. Add up the total balance of all these accounts to get your total savings.

Next, determine the value of your home equity. This is the difference between what your home is worth and how much you still owe on it. To calculate this, look up the current value of your home and subtract any outstanding mortgage or other loan balances from it. This will give you an estimate of how much equity you have in your home.

Finally, add up the values of any investments you have. These can include stocks, bonds, mutual funds, and other types of investment accounts. Once you have all these values totaled up, this will give you an estimate of your current assets.

Step #2 – Determine your current liabilities

Your current liabilities are all of the debts and financial obligations that you currently have.

This can include things like credit card debt, car loans, student loans, and any other type of loan that you are currently paying off.

To get an accurate picture of your current liabilities, you will need to gather up all of your bills and statements so that you can see exactly how much you owe.

Step #3 – Determine your net worth

Your net worth is your assets – your savings, your home equity, and your stocks and investments – minus your liabilities. To calculate it, simply subtract your total liabilities from your total assets. This will give you your net worth.

Your net worth is a good indicator of your financial health.

It can help you make decisions about saving and investing, and it can also be a useful tool for budgeting. If you want to improve your financial health, focus on increasing your net worth by saving more money and investing in assets that will grow in value over time.

Your goal is to double your liquid net worth quickly.

How to create a personal financial statement – Part 2

Now, you have developed your next worth statement. The next step in creating a personal financial statement is to determine your monthly cash flow of money or annual cash flow.

This second part includes your current income, expenditures, and savings.

Step #1 – Determine your monthly income

Firstly, you will need your income flow section. This could come from your pay stubs, or if you are self-employed, your profit and loss statements.

Your monthly income includes all money that you earn in a month, including salary, wages, tips, commissions, child support, alimony, and any other regular payments that you receive.

Step #2 – Determine your monthly expenses

The next piece is to determine your monthly expenses. This includes things like your mortgage or rent, car payments, credit card bills, and any other regular expenses. You’ll also want to factor in occasional expenses, like doctor’s appointments or annual membership fees.

Your expenses can be divided into two categories: fixed and variable.

Fixed expenses are those that remain the same each month, such as rent or mortgage payments, car insurance, and minimum credit card payments. Variable expenses change from month to month and can include items such as groceries, utility bills, entertainment, and clothing.

Step #3 – Determine your monthly savings

Typically, most advice will leave out monthly savings. However, this. is a critical piece to learning how to FI – financial independence.

Once you have both your income and expense information, you can begin to calculate your monthly savings. To do this, simply take your total income and subtract your total expenses. The remaining amount is what you have available to save each month.

Maybe you just calculated this and realize you have a negative number (meaning you spend more than you earn each month), then you will need to make some changes in order to improve your financial situation.

It is important to note that a personal financial statement is not static.

Your income and expenses can change from month-to-month, so it is important to recalculate your statement on a regular basis. Additionally, as you begin to save more money each month, the amount available for savings will increase as well.

How to use a personal finance statement template

A personal financial statement is a snapshot of your financial health at a given point in time. It lists your assets, liabilities, and net worth so you can see the big picture of your finances.

You can use a personal finance statement template to track your progress over time and make changes to improve your financial health.

Here’s how to use a personal finance statement template:

• Enter your information into the template. This includes details about your income, expenses, debts, and assets.
• Review your numbers and calculate your net worth. This is the difference between your total assets and total liabilities.
• Watch for comparisons. Compare your net worth from one period to another to track your progress over time.
• Make tweaks. Make changes in areas where you want to improve, such as increasing savings or paying down debt.
• Repeat steps 1-4 periodically . Then you can see how well you’re doing and make necessary changes

How to interpret a personal finance statement

A personal financial statement is a document that shows your current financial health. It lists your assets and liabilities, giving you a clear picture of your net worth.

• Positive net worth means you have more assets than debt.
• Negative net worth means you have more debt than assets.

Your personal financial statement will help you to set financial goals and track your progress over time. For example, if you want to become debt-free within five years, you can use your statement to create a budget and track your progress each year.

If you have a negative net worth, don’t panic! You can improve your financial health by paying off debts and building up your savings.

Creating a budget will help you make the most of your income and make headway on your financial goals.

How to use a personal financial statement to make financial decisions?

This is the important piece of becoming a millionaire.

A personal financial statement can help you see where your money is going each month and make changes to ensure that you are saving enough for your future goals.

Way #1 – Look at your current financial situation

Your personal financial statement is a record of your income and expenses over a period of time. This information can be used to make financial decisions, such as whether to save money or invest in a new business venture.

If you are looking to save money, you will want to compare your total income to your total expenses. If your expenses are greater than your income, you will need to find ways to reduce your spending. You may also want to consider investing in a savings account or retirement fund.

If you are looking to invest in a new business venture, you will want to assess your current financial situation. You will need to determine how much money you can afford to invest and whether or not the venture is likely to be successful.

Doing this analysis before making any decisions can help you avoid making costly mistakes.

Way #2 – Determine your financial goals

There are a few key things to keep in mind when you’re determining your financial goals.

First, you need to think about your short-term and long-term goals.

• Your short-term goals might include things like saving up for a down payment on a house or car or paying off high-interest debt.
• Your long-term goals might include things like saving for retirement or sending your kids to college.

Once you’ve determined your goals, you need to think about how much money you’ll need to reach them. This is where a personal financial statement can come in handy.

This information can help you figure out how much money you have available to put towards your financial goals.

Once you have an idea of how much money you need to reach your financial goals, the next step is to develop a plan for how you’re going to save that money. This might involve setting up a budget and sticking to it, investing in a specific savings account or investment account, or taking advantage of employer matching programs if they’re available.

Making smart financial decisions is important for achieving both your short-term and long-term goals. A personal financial statement can help you determine how much money you need to reach your goals, and develop a plan for saving that money.

Way #3 – Make a budget

Your personal financial statement can be a helpful tool when you’re trying to make a budget. This document lists your income and expenses and can give you a clear picture of your financial situation.

To use your personal financial statement to make a budget:

• Look at your overall income and expenses. This will give you an idea of where your money is going each month.
• What are Necessary Expenses? Determine which expenses are necessary and which ones you can cut back on.
• Prioritize your List. Make a list of your monthly income and expenses, with the necessary expenses first. And drop the expenses at the bottom of the list.
• How Much is Left? Determine how much money you have left over each month after paying for necessities. This is the money you can use for savings or other goals.
• Adjust your budget as needed based on changes in your income or expenses.

Way #4 – Invest in yourself

There are a lot of things you can do to invest in yourself, but one of the smartest things you can do is to invest in your personal finance education.

In fact, one of the popular millionaire quotes from Warren Buffet is :

Invest in yourself as much as possible. Warren Buffet

Investing in yourself is one of the smartest things you can do.

Way #5 – Stay disciplined

Making financial decisions can be difficult, but if you have a personal financial statement, it can help you stay disciplined.

A personal financial statement is a document that shows your income, expenses, and assets. It can help you track your spending and see where you can save money. That my friend is black and white information.

Making financial decisions can be difficult, but if you have a personal financial statement, it can help you stay disciplined and on track.

What are some common mistakes to avoid when creating a personal finance statement?

There are many common mistakes people make when creating a personal financial statement. This can lead to an inaccurate picture of your financial situation and make it difficult to make informed decisions about your finances.

Any of these common mistakes can also lead to problems down the road because you will be unable to meet your financial obligations.

• Not including all sources of income
• Not including all debts and expenses
• Forgetting to track new sources of income
• Overstating or understating expenses
• Not properly categorizing expenses
• Forgetting to update (or review) the statement regularly
• Not tracking progress over time
• Too scared to seek professional help if needed.

By avoiding these common mistakes, you can create a personal financial statement that accurately reflects your financial situation and helps you make better decisions about your money.

How often should a personal finance statement be updated?

You should update your personal finance statement at least once a year.

However, you may want to update it more frequently if you have significant changes in your income or expenses. For example, you may want to update your personal finance statement after you get a raise or buy a new car.

A Personal Financial Statement Template Example

A personal financial statement is a document that summarizes your financial health.

It includes information about your income, expenses, debts, and assets. This information can be used to make informed decisions about your finances.

There are many personal finance statement templates available online. Some banks and financial institutions offer their own templates. You can also find templates in our free resource library. Once you find a template you like, you can download it and fill it out with your own information.

When filling out a personal financial statement template, be sure to include accurate and up-to-date information.

This will give you the most accurate picture of your financial health. Review your statements regularly to track your progress and make changes as needed.

Time to Create A Sample Personal Financial Statement

When creating a personal financial statement, it is important to include all sources of income, not just your salary. This includes any freelance work, investments, or other forms of passive income. Additionally, make sure to include any government benefits or assistance you receive.

Excluding all sources of income will give you an inaccurate picture of your financial situation and make it difficult to create a realistic budget.

This is something you need to spend dedicated time doing to create a personal financial statement worksheet.

Over time, this wealth management tool will help you to become the next millionaire.

Know someone else that needs this, too? Then, please share!!

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Home > Finance > Personal Financial Statement: Definition, Uses, And Example

Personal Financial Statement: Definition, Uses, And Example

Published: January 7, 2024

Learn about the definition, uses, and example of a personal financial statement in the world of finance. Understand its importance and impact on your financial planning.

• Definition starting with P

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Understanding Personal Financial Statements

When it comes to managing your finances, having a clear understanding of your financial position is essential. This is where personal financial statements come into play. In this article, we’ll explore the definition, uses, and provide an example of a personal financial statement.

Key Takeaways:

• Personal financial statements provide a snapshot of an individual’s financial position.
• These statements are useful for assessing one’s net worth, cash flow, and financial health.

A personal financial statement is a document that summarizes an individual’s financial situation, including their assets, liabilities, income, and expenses. It provides a comprehensive overview of one’s financial health and can be an invaluable tool for making informed financial decisions.

Let’s delve deeper into the various components of a personal financial statement:

Assets refer to items of financial value that an individual owns. This can include cash, savings accounts, investments, real estate, vehicles, and personal belongings. In the personal financial statement, these assets are listed at their current market value. By calculating the total value of assets, one can determine their net worth.

Liabilities

Liabilities encompass the debts and obligations that an individual owes. This can include credit card debt, mortgages, student loans, car loans, and any other outstanding debts. Similar to assets, liabilities are also listed in the personal financial statement, giving a clear picture of one’s overall financial obligations.

Income and Expenses

The personal financial statement also includes an individual’s income and expenses. Income refers to all sources of money inflow, such as salary, rental income, investments, or any other forms of income. Expenses, on the other hand, encompass all the money outflows, including rent/mortgage payments, utilities, groceries, transportation costs, and other personal expenses. By analyzing this section, one can assess their cash flow and determine if they are living within their means.

Uses of Personal Financial Statements:

• Assessing net worth: By calculating the total value of assets and subtracting liabilities, one can determine their net worth.
• Evaluating financial health: Personal financial statements provide a holistic view of an individual’s financial health, helping identify areas for improvement.
• Applying for loans: Lenders often require personal financial statements when assessing an individual’s creditworthiness.
• Planning for the future: These statements serve as a foundation for setting financial goals and creating a budget.

Example of a personal financial statement:

Let’s take a look at a simple example of a personal financial statement:

Personal Financial Statement of John Doe

• Cash: $10,000
• Savings Account: $20,000
• Investments: $50,000
• Real Estate: $150,000
• Total Assets: $230,000
• Mortgage: $100,000
• Student Loans: $20,000
• Credit Card Debt: $5,000
• Total Liabilities: $125,000
• Salary: $60,000
• Rental Income: $12,000
• Total Income: $72,000
• Monthly Rent/Mortgage: $1,500
• Utilities: $200
• Groceries: $400
• Transportation: $300
• Total Expenses: $2,400

In this example, John Doe’s net worth is calculated by subtracting his liabilities ($125,000) from his assets ($230,000), resulting in a net worth of $105,000. His monthly cash flow can also be determined by subtracting expenses ($2,400) from income ($6,000), resulting in a positive cash flow of $3,600.

Personal financial statements are crucial for managing your finances effectively. By regularly updating and analyzing your personal financial statement, you can gain valuable insights into your financial standing and make informed decisions to achieve your financial goals. Whether you’re applying for a loan, evaluating your financial health, or simply aiming to improve your financial well-being, personal financial statements are an essential tool in your financial toolkit.

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Why All Small Business Owners Need a Personal Financial Statement

Running a small business is exhilarating, demanding and often a blur of financial uncertainty. While most entrepreneurs focus on their business’s bottom line and keep their financial statements current, they often neglect to document their personal finances. That’s wrong. Every small business owner needs to create a personal financial statement (PFS), which serves as a personal balance sheet, documenting your assets, liabilities and net worth. 

When do you need a personal financial statement?

Many small business owners may need a loan or other outside financing as they grow their companies. That usually requires providing a lot of documentation to the lender. But lenders don’t only want to see your business finances. Most require a personal financial statement as well.

If you decide to pledge personal assets as collateral, lenders definitely want to know the details about those assets. Financial institutions may wish to conduct a fiscal health evaluation of your personal finances so they can assess how well you manage money. For instance, if you have few assets and a lot of outstanding debt, it can indicate you would have trouble repaying a loan.

Are you thinking of buying an existing business or a franchise? The business owner, broker and/or franchisor will ask for a PFS as evidence that you’re financially able to purchase the business or franchise.

If you plan to rent a commercial office, retail space, or other types of business space, the landlord will likely request a personal financial statement before approving your lease.

As you can see, there are numerous reasons you need a PFS. It’s smart to prepare yours now (and keep it updated) so it will be ready when needed.

Personal financial statements are financial snapshots offering numerous benefits.

Beyond simply tracking your assets and liabilities, a PFS offers several vital benefits for entrepreneurs. Creating your PFS is like getting a checkup, except the result is a fiscal health evaluation rather than a physical one.

Some of the benefits of preparing a personal financial statement (sometimes called a personal financial summary):

•   Securing funding: As we already noted, when seeking loans for business expansion, new equipment or company vehicles, lenders rely on your PFS to assess your creditworthiness and ability to repay. A strong PFS significantly increases your chances of securing favorable loan terms and interest rates.
• Understanding your net worth: Your PFS provides a clear picture of your overall financial standing, including your assets (cash, investments, property) and liabilities (debt, loans, mortgages). Seeing a comprehensive view helps you make informed decisions about investments, savings goals and risk management.
• Making prudent financial decisions: With a clear understanding of your income, expenses and debt obligations, you can make informed choices about spending, investments and financial planning. Your PFS empowers you to avoid impulsive decisions and build a solid financial foundation.
• Monitoring progress and adapting: Regularly reviewing your PFS allows you to track your progress toward your financial goals and identify areas for improvement. This ongoing review process enables you to pivot, adapt, and adjust your strategies as your business and personal circumstances evolve.

What's included in a personal financial statement?

A typical PFS is divided into two main sections—assets and liabilities.

List of assets

• Current Assets include cash, checking and savings accounts, certificates of deposit, short-term investments and accounts receivable.
• Investment Assets include stocks, bonds, mutual funds and retirement accounts (IRAs, 401(k)s).
• Fixed Assets include real estate holdings and personal property, such as jewelry, cars and other items of significant value (art collection, first editions of books, etc.)

List of liabilities

• Current Liabilities include credit card debt, outstanding bills and short-term loans.
• Long-term Liabilities include mortgages, car loans, student loans and personal loans.

Do not include business assets or liabilities in your personal financial statement.

Creating your financial snapshot

You don’t need to be a financial wizard to create a PFS. Here’s how:

• Gather your documents: Collect bank statements, investment account statements, loan documents and receipts for major purchases.
• Choose a format: You can use an online template, spreadsheet or pen and paper. Choose the best format for you and ensure consistency for future updates.
• List your assets: Identify and value all your assets using current market values for investments and real estate.
• List your liabilities: Include all your debts, noting the remaining balances and interest rates.
• Calculate your net worth: Subtract your total liabilities from your assets to determine your net worth. While this is part of your overall personal balance sheet, you should keep this calculation as a separate net worth statement.
• Review and update regularly: Your PFS is not static. Update it regularly, ideally quarterly, to reflect changes in your financial situation.

When creating your personal financial statement, it’s critical to be honest and accurate. This wealth assessment is for your own benefit to help you (and lenders) make informed decisions. No one is judging you.

A PFS helps you take ownership of your personal finances and equips you with the knowledge and confidence to navigate the challenges and reap the rewards of entrepreneurship. A healthy business rests on a solid personal financial foundation.

If navigating financial statements feels overwhelming, consider consulting with a financial advisor, accountant or SCORE mentor .

National Bankers Association Foundation

The  National Bankers Association Foundation’s  mission is to eliminate the racial wealth gap by ensuring underserved communities have fair access to transformative financial education, services, and resources. To accomplish this, we support the work of Minority Depository Institutions (MDIs) through our four strategic pillars, which include: Financial Education, Entrepreneurship and Small Business, Research and Impact, and Collaboration and Capacity Building.

Copyright © 2024 SCORE Association, SCORE.org

Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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What Is a Financial Statement: 4 Types With Examples

6 minute read

Key Takeaways

Financial statements summarise a company's financial activities, presenting comprehensive details about its financial position, performance, and cash flows at a specific time.

There are 4 primary types of financial statements, including the balance sheet, the income statement, the cash flow statement, and the statement of retained earnings.

Whether you're just starting a business or have been operating for a while, having transparent financial reports is crucial. Eventually, you will need to clarify your financial situation, whether for a loan application, investor pitches, or strategic decisions like pricing and revenue projections. In these situations, you will likely need "financial statements."

This article will cover the basics of financial statements, why they're necessary, the various types and examples, and the differences between audited and unaudited statements.

What Is a Financial Statement?

Financial statements are a compilation of written records that display a company's financial activities and performance at a specific time, usually annually, quarterly, or monthly. The purpose is to provide the company's financial position information to internal and external stakeholders.

Financial statements are typically prepared by bookkeepers and accountants who adhere to Generally Accepted Accounting Principles (GAAP) or industry-specific best practices.

Why You Need Financial Statements

Financial statements are crucial for monitoring a company's financial health, obtaining funding, and reducing tax complexities.

Companies often prepare these statements quarterly to assess business profitability, financial stability, and resource allocation. This aids in making informed key decisions, such as pricing strategies, cost reduction, and growth planning.  

When seeking outside investment or loans, these statements offer shareholders and creditors crucial details to assess the company's creditworthiness, risks, and potential returns on investment or loans. Properly prepared financial statements could make securing necessary funding more attainable.

Lastly, annual financial statements are crucial for tax reporting and tax return filing.  Documenting income, expenses, assets, and liabilities in the statements simplifies completing the paperwork required by tax authorities each year.

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4 Types of Financial Statements

The primary types of financial statements are the balance sheet, income statement, cash flow statement, and statement of retained earnings. 

Each offers a different perspective on a company's financial status. Combined, they provide a complete picture for owners, stakeholders, and investors. 

Let's look into each of these statements to understand their significance and components.

Balance Sheet

A balance sheet is a summary of a company's assets (what the company owns), liabilities (what the company owes), and shareholders' equity (the net worth of shareholders) at the end of a specific period in time, most commonly a year. 

This statement is alternatively known as a statement of financial position or a statement of financial condition.

Components of a Balance Sheet

The 3 main components of a balance sheet consist of assets, liabilities, and shareholders' equity. The table below breaks down the key details. 

This statement is called a balance sheet because the total assets must equal the total liabilities and shareholders' equity, ensuring the balance between what a company owns and what it owes. Therefore, the balance sheet follows the equation: 

Total Assets = Total Liabilities + Total Shareholders' Equity.

 Income Statement

An income statement is a financial record that presents a company's revenue and expenses over a specific period, most commonly a year, indicating whether the company is making a profit or loss. This statement helps business owners determine profit-generating strategies, such as increasing revenues or reducing costs.

An income statement is also referred to as a profit and loss (P&L) statement or an earnings statement.

Components of an Income Statement

The main components of the income statement include revenue, expenses, and net profit or loss. 

These may be broken down into

• Revenue: The total income earned by a business within a specific period.
• Costs of goods sold (COGS): The total expense of making the products, covering the cost of materials and labor.
• Gross profit: The total revenue deducts COGS.
• Total expenses: The total amount of money spent to make, sell, or promote the products.
• Operating income: The total profits minus operating expenses, such as equipment and labor costs.
• Depreciation: The reduction in value of a company's assets over time.
• Pretax income or income before taxes: Income minus costs but before taxes are subtracted.
• Net income: The total income after deducting all costs.

The income statement formula can be written as:

Net income = Revenues – Expenses

Cash Flow Statement

A cash flow statement, also known as a statement of cash flows, aggregates data regarding all cash and cash equivalents, inflows, and outflows that a company experiences in a given period. 

This statement shows where cash is being generated and used and whether the business has enough liquid cash to meet its obligations and invest in assets.

Tip: Explore our articles to find everything you need to know about cash flow management and cash flow analysis.

Components of a Cash Flow Statement

A cash flow statement includes operating activities, investing activities, and financing activities. 

• Operating activities: the cash flow generated or used in regular business operations, including revenue and expenses from goods and services provided.
• Investing activities: The cash flow from buying or selling assets, such as real estate and vehicles, or intangible assets like patents and licenses.
• Financing activities: The cash flow resulting from the acquisition of debt or equity.

Example of Cash Flow Statement

Statement of Retained Earnings 

The retained earnings statement is a financial report that shows the net income a company has retained after distributing dividends to shareholders. It also outlines the changes in this balance during a particular accounting period.

These earnings are usually used to pay off debts or reinvest. When retained earnings gather over time, they can be referred to as accumulated profits.

Some company's financial statements may not feature a separate statement of retained earnings. Instead, this information is included or provided as an addendum to either the income statement or balance sheet.

A statement of retained earnings is also called a statement of change in equity.

Components of a Statement of Retained Earnings 

The retained earnings consist of three main elements: the initial retained earnings at the beginning of the period, the net profit incurred during the accounting period, and the dividends distributed in both cash and stock during the accounting period.

• Beginning Retained Earnings: This is the equity balance from the end of the previous period, which carries forward to the start of the current period.
• Net Income: The profits generated from operations, automatically adding to the company's equity and transferring to retained earnings at the end of the year.
• Dividends: This represents the portion of profits distributed to shareholders rather than being retained by the company.

Retained earnings are calculated by combining the beginning retained earnings with the net income for the current period and then subtracting any dividends paid out to shareholders. 

In other words, the formula is:

Retained Earnings = Beginning Retained Earnings + Net Income − Dividends

Example of Statement of Retained Earnings

How Different Types of Financial Statements Interact

Essentially, a company’s operations, investments, and financing activities are interrelated, resulting in the connection between various types of financial statements.

For instance, the net income detailed in the company's income statement initiates the cash flow statement and contributes to retained earnings on the balance sheet, retained earnings on the statement of retained earnings will be stated on the balance sheet, and depreciation recorded in the income statement affects asset values on the balance sheet. 

Changes in working capital, asset purchases, borrowing, debt repayment, dividends, or stock repurchases affect both the cash and equity balances on the balance sheet and the cash flow statement.

Do Financial Statements Need to Be Audited?

Unaudited financial statements are reports prepared by accountants but have not undergone examination and verification by an external independent auditor. 

In contrast, audited financial statements are reviewed by a certified public accountant (CPA) to ensure compliance with standard accounting rules. Naturally, audited financial statements are more credible, but they require additional time and cost to prepare.

Whether financial statements require auditing depends on the entity and jurisdictions. For instance, in the US, publicly traded companies must file audited financial statements . Similarly, in New Zealand, financial statements submitted to the Companies Office must be audited . In Hong Kong, the Hong Kong Companies Registry mandates auditing for all companies. 

When securing a loan or funding, most potential funders and creditors prefer audited financial statements over unaudited ones.

Get a Good Business Account

Keeping good financial records is essential for a successful business. However, bookkeeping can easily get complicated if you combine personal and business finances in a single account. Hence, having a dedicated business account is the vital first step.

A business account that can be integrated with accounting software and allows you to connect and download transactions directly from your linked business bank account will be a significant plus. This will simplify not only your financial statement preparation but also your overall financial management.

If your business is registered in Hong Kong, Singapore, or the BVI, Statrys offers a multi-currency business account integrated with Xero accounting software and a comprehensive reporting dashboard. 

Here is a quick look at our key services:

What is a simple explanation for financial statements?

Financial statements are summaries that outline a company's financial activities, including its income, expenses, assets, liabilities, equity, and cash flow at a particular point in time.

What are the types of financial statements?

The four basic financial statements include: 1. Balance Sheet: Shows the company's assets, liabilities, and shareholders' equity at a specific period. 2. Income Statement: Outlines the company's revenues and expenses over a period, resulting in net profit or loss. 3. Cash Flow Statement: Details the inflows and outflows of cash and cash equivalents, indicating the company's liquidity. 4. Statement of Retained Earnings: Displays changes in retained earnings over a period, including profits retained in the business after dividends.

What is the objective of financial statements?

The objective of financial statements is to provide stakeholders with a clear and accurate overview of the company's financial status and performance. This information helps in making strategic decisions, securing funding, and complying with regulatory requirements.

When do you need financial statements?

You often need financial statements for annual tax reporting, quarterly company finance assessments, and when asking for loans.  In cases of significant corporate events like changes in ownership, sales, or mergers, up-to-date financial statements are also necessary. They provide a transparent financial snapshot of the company.

Can I prepare financial statements myself?

Depending on the size and needs of your business, you may be able to prepare the unaudited financial statements yourself. However, it's not generally recommended, as errors can lead to fines and more complications. It's often better to work with a professional who is familiar with accounting principles to ensure accuracy and compliance with relevant standards. Additionally, if an audited financial statement is required, it must be prepared by a Certified Public Accountant (CPA) or an equivalent professional.

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PERSONAL STATEMENT EXAMPLE Accounting and Finance Personal Statement

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Accounting and Finance Personal Statement

Accounting is a necessary activity within everyday life, without which businesses would not be able to function. Management Accounting is the core operation of any successful enterprise. My interest began when I started a business at the age of fifteen buying and selling goods at a profit. I learnt to manage my profit by investing in goods with high customer interest and low costs. This made me realise the importance of money in society and promoted my desire to explore this subject further at university.

Mathematics has always been my strongest and favourite subject during my academic life and I believe my well-developed numeracy skills will help me advance in this course. By also studying Chemistry at A-level, I have developed my analytical and critical skills. I was able to put these skills to the test by participating in the United Kingdom Mathematics Trust Challenge three times and I look forward to tackling even more demanding challenges during the degree course. Economics A-level has allowed me to expand my knowledge on the basics of the economy and the high demands of consumers. I have independently developed a clearer understanding of the world of finance ; reading 'The Money Machine' expanded my perspective of the financial system in the City, making me aware of the importance of interest rates to a business and the influence on revenue.

I gained valuable insights into the world of finance by completing my work experience at accounting firms within the North West, where I was asked to complete annual reports for local businesses to assess their profits. During work experience at SL Accountancy Solutions I was surrounded by colleagues who spoke Mandarin to their clients. I found I was able to adapt to a foreign language environment and managed to communicate effectively with Mandarin-speaking clients through phone calls. Working among people who have the same interests as me and listening to their experiences made me even more determined to study Accounting and Finance at University level.

With the increasing interaction of global companies, understanding different cultures and languages is becoming a vitally important aspect of modern business. Through speaking fluent Cantonese and having lived in Hong Kong for 8 years, I can fully appreciate the variety of cultures within an industry and hope to utilise this valuable skill by working in an international corporation in the future. For the past three years I have volunteered at Barnardo's, dedicating several hours a week to helping my local community.

Working part-time as a sales associate at Hollister, alongside my studies, has advanced my abilities to interact with customers in a friendly manner and enabled me to manage my time wisely. I have taken on roles of responsibility in school such as being elected as form captain, which enhanced my organisational skills. Taking part in the Young Enterprise Scheme in the role of financial director allowed me to showcase my numerical and logical skills. I was able to present the accounts of the company and dictate where the costs were allocated. I enjoyed this role as it gave me a sense of control over the business. I worked in a team with fellow students in order to devise a business strategy to sell and advertise our handmade products. When the Managing Director left our group, I felt it was my duty to take charge and organise our company. This shows that I can adapt my role under different circumstances.

I was also selected by teachers as peer mentor for the new Year 7 students, helping them make the transition into secondary school, highlighting my ability to work with people of different ages. Being a fully committed and dedicated student I will persist until my ultimate goal is achieved. I am firmly convinced that my career lies in the field of accounting and finance and by following this degree course I will build a crucial foundation for my future.

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• Monthly service fees
• Overdraft fees
• Overdraft protection fees
• Non-sufficient funds fees
• Out-of-network ATM fees
• Foreign transaction fees
• Excess transaction fees
• Wire transfer fees
• Paper statement fees
• Lost debit card fees
• Inactivity fees
• Account closing fees

Negotiating fees with your bank

How to avoid bank fees: practical tips.

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• Many banks charge monthly service fees, overdraft fees, and out-of-network ATM fees.
• You may qualify for a fee waiver if you meet certain requirements, like keeping a minimum daily balance.
• You can avoid most bank fees by planning ahead or choosing a bank with a fee-free account.

Keeping your money in a bank account can be expensive if you're not mindful of common bank fees.

However, there's a way to avoid paying most of these fees. The first step is to be aware of what the fees are. The next step is to be proactive about avoiding these fees or choosing the best bank to fit your goals.

1. Monthly service fees

Some banks, particularly brick-and-mortar institutions, charge monthly maintenance fees on accounts. These are fees you'll pay every month, and the bank usually automatically withdraws the money from your account.

The fee could be as little as $5. Sometimes banks charge higher fees on bank accounts that pay higher rates or come with more perks.

With some banks, monthly service fees are non-negotiable. Others won't make you pay if you meet certain criteria. Maybe the bank will waive your monthly fee if you make at least 10 debit card transactions per month, for example, or if you maintain a minimum $500 daily balance.

How to avoid monthly service fees

Check what the requirements are to waive them. If you pay a fee every month unless you keep a $500 balance, try to keep at least $500 in your account at all times. The rules should be listed on the bank's website, or you can call to speak with a customer service representative.

Another option is to choose a bank that simply doesn't charge monthly service fees. For example, many online banks and credit unions do not charge monthly fees on bank accounts, so you don't have to worry about meeting the requirements each month.

2. Overdraft fees

Most banks charge you a fee if your checking account balance goes below zero dollars.

A bank imposes overdraft fees if a purchase would overdraw your account, and the company covers your overdraft so the transaction goes through. This is typically the process when you swipe your debit card but don't have enough money in your checking account to cover the purchase.

Overdraft fees vary by bank, but they usually range from $10 to $38 each time you overdraw.

Banks also have a limit on how many times you can be charged each day. Maybe you don't realize you've overdrawn your account, so you swipe your debit card three times in one day. You could end up paying around $100 in overdraft fees that day.

How to avoid overdraft fees

Your bank should have an overdraft protection option, but you'll likely have to set it up yourself rather than be enrolled automatically.

With overdraft protection, you typically link your checking account to a savings account . If you overdraw, money moves from savings into your checking account so your balance stays above zero.

Other banks have an overdraft line of credit option. When you overdraw, you automatically borrow money from a line of credit. You'll have to pay the money back, sometimes with interest. It's a similar setup as a credit card.

You might find banks that offer several ways to minimize overdraft charges. If that's the case, you can select overdraft protection that's the most suitable for your needs.

The best banks for avoiding overdraft fees have eliminated these fees entirely. If a purchase would overdraw your account, the bank denies the transaction.

3. Overdraft protection fees

Yes, you can use overdraft protection to avoid paying an overdraft fee. But some large banks charge a smaller fee for tapping into overdraft protection.

How to avoid overdraft protection fees

The easiest way to avoid paying overdraft protection fees is to make sure your balance never drops below zero. You can track your balance online or via the bank's mobile app. Ask your bank about balance alerts, which are text messages or emails sent to you if your balance hits a certain dollar amount to let you know you're close to overdrawing.

You can also choose a bank that doesn't charge overdraft protection fees. There are plenty of institutions with free overdraft protection services, including Chase Bank , Capital One Bank, and Varo Bank.

4. Non-sufficient funds fees

You'll pay a non-sufficient funds (NSF) fee if a purchase would overdraw your account, and the bank denies your transaction.

A bank charges an NSF fee when a check bounces or you don't have enough money in your account to cover an electronic payment. The fee amount and daily limits are usually the same as the bank's overdraft policy.

How to avoid NSF fees

Because these fees are similar to overdraft fees, enrolling in overdraft protection could help you out. You may also bank with a company that doesn't charge overdraft or NSF fees.

5. Out-of-network ATM fees

Banks typically have ATM networks. Use an in-network ATM to check your balance or withdraw money for free.

A bank may charge you for using an ATM outside of its network, usually $2 or $3 each time. Additionally, the ATM provider will probably charge you a few more dollars.

How to avoid out-of-network ATM fees

Avoid ATM fees by choosing a bank that has a large ATM network and has a machine close to your home or office.

You could bank with an institution that doesn't charge out-of-network fees. Some banks will also reimburse you if an ATM provider charges you.

6. Foreign transaction fees

A foreign transaction fee is a charge for using your debit card outside the U.S.

There are two main types of foreign transaction fees: one for buying something with your debit card and one for using an ATM abroad.

Debit card issuers Visa and Mastercard both charge a 1% foreign transaction fee. Many institutions require you to cover this fee, and some charge an extra percentage on top of that.

For an ATM transaction, some banks charge the fee they'd normally impose for using an out-of-network ATM fee on top of the normal percentage they charge for foreign transactions.

How to avoid foreign transaction fees

Foreign transaction fees are typically unavoidable if you want to use your debit card abroad. But to pay less in foreign transaction fees, you can withdraw more money at once so you don't have to return to the ATM later — just consider whether you feel safe carrying a large amount of cash.

7. Excess transaction fees

You might pay a fee to take money out of a savings account . The federal rule Regulation D states there are transfer limits for savings accounts. Banks may choose to suspend the monthly transfer limit so customers can make unlimited monthly transactions — or they could enforce a six-per-month limit.

Many banks charge a fee if you make more than six monthly transfers, usually around $10 per transaction.

How to avoid excess transaction fees

As of April 2020, banks are no longer legally required to penalize you for exceeding six monthly transactions. Some banks have waived their fees altogether. Others have increased the number of times you can withdraw. Check with your bank about its excess transaction policy.

If you bank with a financial institution that enforces the monthly transaction limit, you may want to keep more money in your checking account as a buffer so you don't constantly need to use money from savings.

8. Wire transfer fees

A wire transfer is a tool for moving money electronically from your bank to a friend or family member's bank. It can be especially useful if you don't have access to the recipient's bank. For instance, maybe you bank with a national bank but your friend banks with a local institution across the country.

You can send wire transfers within the U.S. or internationally, and international transfer fees are more expensive. You can expect to spend $10 to $50 per wire transfer.

How to avoid wire transfer fees

There are multiple ways to deposit money into someone else's account . Find out if there's a more affordable way to send money to a friend or family member.

You could send money electronically through an app like Venmo or Zelle. Or if you have easy access to the person's bank, walk in and ask to deposit cash or a check into their account. You will need their bank account information, though.

9. Paper statement fees

Most banks provide you with digital bank statements for free. Each month, you can log into your online account and check your most recent statement.

If you want paper statements mailed to your home, you'll probably pay a fee of around $3 per month.

How to avoid paper statement fees

The only way to get out of this fee is to stop receiving paper statements.

Not sure if you're enrolled in paper bank statements? Check your online account settings. Opting out of paper statements — and into electronic statements — is usually as simple as checking a box.

10. Lost debit card fees

Some banks charge you for ordering a replacement if your debit card is lost or stolen , and you might pay extra if you need express delivery. You could end up paying between $5 and $30 to get a new card.

How to avoid lost debit card fees

The good news is that not every bank charges a fee for replacing your card, so if you've lost your debit card, don't freak out just yet. Some will only charge you for a rush order.

Otherwise, the best way to avoid this fee is just to hang onto your debit card. (If you tend to lose things, this is easier said than done!) It could be helpful to buy a wallet or purse to keep all your important items in one place.

11. Inactivity fees

Banks may charge a monthly inactivity fee if you don't use your account for six months or more. You could pay up to $20 per month, which is a lot for a bank account you aren't even using.

How to avoid inactivity fees

Regularly log into each of your bank accounts to review transactions. If you aren't using a bank account anymore, consider closing it and moving all the money to a new account you'll actually utilize.

Do you have a reason for wanting to keep this account open, even though you don't tap into it much? To avoid an inactivity fee, make an occasional purchase with your debit card so the account stays active.

12. Account closing fees

You won't always pay a fee for closing your bank account . But you may be charged for closing it within, say, three to six months of opening it. These fees are typically around $25.

How to avoid account closing fees

First, ask yourself how long you expect to use a bank account before opening it. If you plan to open an account to receive a cash bonus, then close it immediately, it could backfire.

If you're considering closing an existing account, look up your bank's closing fee policy online. You may find out you only need to keep the account open for another month or two to avoid paying a fee.

You may decide it's still worth it to close your account early, though. For instance, if you're paying a $25 monthly service fee, it would be financially prudent to pay $25 once to close your account a few months early.

There are multiple ways to cut down on common banking fees. But the easiest way is probably to work with a bank that charges low fees overall — especially monthly service, ATM, and foreign transaction fees.

If you're set on finding a new bank account with no fees, focus your search on online banks and credit unions .

If you enjoy your current financial institution, there are strategies for fee-fee banking. For example, you may consider negotiating your fees if your account is in good standing (i.e. you don't owe any overdraft or NSF fees and your balance is above $0). Call the bank so you can lay out your case to a customer service agent.

Start by asking if the bank will waive or lower your monthly fee if you keep a certain balance or make a certain number of transactions. If they don't budge, tell them you're considering switching to a competitor. Sometimes, the threat of losing a customer will prompt a bank to be more lenient.

Avoiding bank fees FAQs

Online banks and credit unions are a great place to look for no-fee bank accounts. They have lower overhead costs than traditional banks with many physical locations.

Alerts notify you of a low balance, upcoming bill, or a large transaction so that you can avoid overdrafting your account. Since checking account are primarily used for spending, alerts can ensure maintain your account balance — minimizing overdraft fees in the process. 

Only visit ATMs that are in your bank's network or choose a bank that reimburses out-of-network ATM fees. You may also consider getting cash back at a retailer while you're shopping instead of visiting an out-of-network ATM.

Customers who have a longstanding relationship with a bank or have no previous offenses may be able to lower certain fees or have them waived. Fee waivers and banking negotiations may not always be possible in every situation, though. 

Online banks have a reputation for lower fees than brick-and-mortar banks. They often also offer higher interest rates on deposits, in part because they don't have costs associated with maintaining branch locations.

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Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards .

Please note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed, or may no longer be available.

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Introduction As a dedicated marketing professional with over five years of experience in digital marketing and brand management, I am passionate about creating innovative strategies that drive business growth and enhance brand visibility. My expertise in SEO, content creation, and social media marketing has consistently delivered measurable results. I am eager to bring my skills and enthusiasm to a dynamic team at XYZ Corporation.

Academic Background I hold a Bachelor’s degree in Marketing from the University of California, Berkeley, where I graduated with honors and maintained a 3.8 GPA. My coursework in digital marketing, consumer behavior, and market research has provided me with a comprehensive understanding of marketing principles and strategies. During my studies, I completed a capstone project that involved developing a comprehensive marketing plan for a local startup, which significantly increased their online presence and customer engagement.

Professional Experience Currently, I work as a Digital Marketing Specialist at ABC Tech Solutions, where I lead a team responsible for developing and executing digital marketing campaigns. My role involves managing SEO initiatives, creating engaging content, and analyzing campaign performance to optimize results. Notably, I successfully increased organic search traffic by 40% and improved conversion rates by 25% through targeted content marketing and SEO strategies. Previously, I worked as a Marketing Coordinator at DEF Retail, where I developed social media strategies that grew the company’s online following by 35%.

Personal Qualities and Skills I am a creative and analytical thinker with strong problem-solving abilities and attention to detail. My excellent communication and interpersonal skills enable me to collaborate effectively with cross-functional teams and clients. I am proficient in various digital marketing tools and platforms, including Google Analytics, SEMrush, and HubSpot. My ability to adapt to changing market trends and continuously learn new skills has been key to my success in delivering impactful marketing solutions.

Future Goals My long-term goal is to take on a leadership role in marketing, where I can mentor junior marketers and drive innovative campaigns that align with business objectives. I am particularly interested in exploring emerging trends in digital marketing, such as artificial intelligence and data-driven marketing strategies. Joining XYZ Corporation will provide me with the opportunity to work on cutting-edge projects and contribute to the company’s growth and success.

Conclusion In conclusion, my passion for marketing, combined with my academic achievements and professional experience, make me a strong candidate for a role at XYZ Corporation. I am excited about the opportunity to bring my expertise and creativity to your team and to help drive your marketing efforts to new heights. Thank you for considering my application. I look forward to the opportunity to discuss how my background, skills, and aspirations align with the goals of your organization.

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Building A Strong Financial Foundation For Your Small Business

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Starting and running a small business is an exciting venture, but it also comes with its financial challenges. Establishing a solid financial foundation is crucial for the long-term success and stability of your business. By proactively managing your finances, understanding key financial statements , and implementing effective financial planning, you can navigate the complexities of entrepreneurship and set your business up for sustainable growth and profitability. Taking these steps ensures that your business remains resilient in the face of financial uncertainties and positioned to capitalize on opportunities as they arise.

Here are five essential steps to help you build and maintain a strong financial base for your small business:

1. take care of your money mindset.

Your attitude towards money plays a significant role in your financial success. A positive money mindset involves viewing money as a tool to achieve your goals, rather than a source of stress or anxiety.

You can create a healthy relationship with money by:

• Educating yourself about financial management and investment.
• Setting clear, achievable financial goals.
• Practicing gratitude for what you have while striving for financial growth.

A positive money mindset can lead to better financial decisions, increased confidence, and a more proactive approach to managing your business finances.

2. Read and Understand Financial Statements

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Financial statements tell you the story of your business’s financial health. They provide insights into your company’s performance and help you make informed decisions.

The three primary financial statements you should be familiar with are:

• Income Statement: Shows your business’s revenues, expenses, and profits over a specific period.
• Balance Sheet: Provides a snapshot of your business’s assets, liabilities, and equity at a particular point in time.
• Cash Flow Statement: Tracks the flow of cash in and out of your business, highlighting operating, investing, and financing activities.

Understanding these statements allows you to identify trends, manage costs, and make strategic decisions to improve profitability.

3. Build a Business Financial Plan

A well-crafted financial plan is essential for guiding your business towards its goals. It should include:

• Revenue Projections: Estimate your sales and revenue for the upcoming period.
• Expense Budget: Outline your expected costs, including fixed and variable expenses.
• Profit and Loss Forecast: Predict your profits based on your revenue and expense estimates.
• Cash Flow Forecast: Anticipate your cash inflows and outflows to ensure you have enough liquidity to cover your obligations.

A comprehensive financial plan serves as a roadmap for your business, helping you stay focused and prepared for future challenges.

4. Monitor Your Results

Regularly monitoring your financial performance is crucial to ensure you stay on track. Set up a system to review your financial statements monthly or quarterly. Key performance indicators (KPIs) to track include:

• Gross Profit Margin: Measures the efficiency of your production process.
• Net Profit Margin: Indicates your overall profitability after all expenses.
• Current Ratio: Assesses your ability to pay short-term liabilities with short-term assets.
• Debt-to-Equity Ratio: Evaluates your financial leverage and risk.

By keeping an eye on these metrics, you can identify issues early, make necessary adjustments, and continuously improve your business’s financial health.

5. Have a Cash Management System

Effective cash management ensures your business has the liquidity it needs to operate smoothly. Key components of a cash management system include:

• Cash Flow Forecasting: Regularly predict your cash flow to anticipate shortages and surpluses.
• Receivables Management: Implement strategies to ensure timely collection of payments from customers.
• Payables Management: Optimize your payment schedule to maintain good relationships with suppliers while managing cash outflows.
• Emergency Fund: Set aside funds to cover unexpected expenses or revenue shortfalls.

A robust cash management system helps you maintain financial stability, avoid crises, and seize growth opportunities.

The bottom line is that building a strong financial foundation for your small business requires a proactive approach and continuous effort. By following these tips you can set your business up for long-term success. Remember, financial health is not a one-time achievement but an ongoing process that requires dedication and attention.

Melissa Houston, CPA is the author of Cash Confident: An Entrepreneur’s Guide to Creating a Profitable Business and the founder of She Means Profit , a bookkeeping and financial consultancy firm. As a Business Strategist for small business owners, Melissa helps women making mid-career shifts, to launch their dream businesses, and I also guide established business owners to grow their businesses to more profitably.

The opinions expressed in this article are not intended to replace any professional or expert accounting and/or tax advice whatsoever.

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