Build Your Own Balance Sheet
If you run your own business, you will know what a balance sheet is. A balance sheet is a necessary management accounting tool for understanding your companies assets, liabilities and equity. However, you don’t have to run your own business to get a benefit in building a balance sheet. In our opinion, every individual in the world should have their own balance sheet in place to understand how there wealth is allocated. This post will explain how to build your own balance sheet.

How many times have you seen it in the news? Celebrity ‘so and so’ has a net worth of £x million. Good for them. Usually these numbers are in the millions or billions. However, the majority of people have a net worth which is significantly lower. The question is, do you know what your own net worth is? If a newspaper wanted to write an article about you tomorrow, could you tell them your net worth? Some of the more advanced readers of this blog will likely have an answer to this, but some of you might be wondering how you go about calculating your net worth. In this post we’re going to explain how to create a basic balance sheet.
What is your networth?
Put simply, your net worth is how much money you have left when you deduct the money you owe from the value of the assets you have. Money you owe could be credit card debt, your mortgage, car payments, electricity bills etc. Your assets include the money in your savings accounts, cash in your pocket, the value of your home, the value of any investments you have, the amount of money you would get if you sold your car etc.
Net worth = Assets – Liabilities
Calculating your Networth
In order to calculate your net worth, the first step is to take a sheet of paper and divide it into two columns. Alternatively, use a spreadsheet such as Microsoft Excel or Google Sheets. On the left hand side, write Assets. On the right hand side, write Liabilities.

The next step is to fill in the assets column. You will need to methodically work through all of the assets you have and prescribe a value to them. For items like savings accounts, this is straight forward as it’s simply the balance of the account. For non-financial assets such as motor vehicles, you will need to determine a value of the asset. The simplest way to do this is to estimate the resale or market value of the car by, for example, looking at how much similar vehicles sell for on sites like Autotrader or Parkers.
List the name of the asset and the value of the asset until you’ve covered everything you own, and then total up the value of these. This is your ‘net asset value’.
The next stage is to do the same for your liabilities (the money you owe). To do this you’ll need to look at credit card balances, the amount of loans outstanding etc. Hopefully the list of liabilities you have is shorter than the list of assets. Most importantly, for your net worth to be positive, the total value of your liabilities will need to be less than the total value of your assets. If you subtract the total of your liabilities from the total of your assets, this will calculate your net worth. How simple was that?
So there you have it, a simple exercise to build your own balance sheet.