A basic net worth statement is a financial document that summarizes what you own and what you owe, providing a snapshot of your overall financial position. It is widely used for personal finance, loan applications, business transactions, and financial planning. While simple in format, it helps individuals and businesses understand their financial health and track progress over time.
What Does a Basic Net Worth Statement Include?
A basic net worth statement lists your assets, liabilities, and calculates your net worth. The formula is straightforward: Net Worth = Total Assets – Total Liabilities
Typical components include:
- Assets: Cash, bank accounts, investments, retirement accounts, real estate, vehicles, business equity, and other valuable items.
- Liabilities: Mortgages, loans, credit card balances, taxes owed, and other debts.
- Net Worth Calculation: The difference between total assets and total liabilities, representing your overall financial position.
Some basic statements also include optional sections like income, monthly expenses, or notes for context, but these are not always required.
Purpose of a Basic Net Worth Statement
A basic net worth statement serves several purposes:
- Financial Planning: Helps you assess your financial standing and set goals.
- Loan Applications: Lenders may request it to understand your ability to repay debt.
- Business Decisions: Provides an overview of personal or business financial health for partnerships or investments.
- Tracking Progress: Allows you to monitor changes in assets and liabilities over time.
Because it is simple, a basic statement is often used for personal tracking or internal purposes. However, it may not be sufficient for legal cases, court submissions, or official financial documentation, which often require CPA-certified statements.
How to Create a Basic Net Worth Statement
- List All Assets: Include cash, investments, property, and other valuables.
- List All Liabilities: Include mortgages, loans, credit card debt, and other obligations.
- Calculate Net Worth: Subtract total liabilities from total assets.
- Review and Update: Check for accuracy and update regularly to reflect changes in finances.
Need a Certified Net Worth Statement?
Dimov Tax can prepare CPA-certified net worth statements for legal, financial, or business purposes.
Contact us today to ensure your net worth is accurately documented and professionally certified.