When applying for credit or a loan, many lenders will ask to review your personal financial statement. If you’ve never created one before, it can seem intimidating, but the process is fairly simple. Here are a few tips for creating your personal financial statement (and a template) to help you get started.
A personal financial statement (PFS) is a document that outlines your financial position at a specific point in time. It identifies assets and liabilities to find net worth and provides a clear picture of your financial health. A PFS can help you make informed decisions about spending, saving, investing, and planning for the future.
A PFS is most often needed when applying for business loans or mortgages but may be required for other types of credit, like personal loans. Lenders will assess a loan applicant’s PFS to determine financial health and lending eligibility.
Start by compiling all relevant financial information, including bank statements, investment portfolios, real estate holdings, and outstanding debts. This can be done with paper copies of statements or through digital account access.
Assets are everything you own that has value. Common categories include: cash and cash equivalents, investments, real estate, and personal property (such as jewelry, art, furniture, vehicles, boats, collectibles, etc.).
Liabilities are your financial obligations. Common categories include: mortgages, credit card debt, student loans, and other debt.
Subtract your total liabilities from your total assets to determine your net worth. This figure provides a clear picture of your financial standing and serves as a benchmark for measuring financial progress over time.
Assets – Liabilities = Net Worth
Are you ready to create your PFS? Whether applying for a loan or wanting to know where you are financially, this simple-to-use template can make the process of gathering your financial information and calculating your net worth a little easier. Click here to download the free personal financial statement template.
Make regular updates: Make it a habit to update your PFS regularly, ideally on a quarterly basis, to reflect any changes in your financial situation.
Review and analyze changes: Take the time to review and analyze any fluctuations in your assets, liabilities, and net worth. This will help you identify trends, spot areas for improvement, and adjust your financial strategy accordingly.
Set financial goals: Use your PFS as a roadmap for setting and prioritizing your financial goals. Whether it’s saving for retirement, paying off debt, or buying a home, align your goals with your current financial reality.
Incorrectly estimating assets: Be conservative yet realistic when valuing your assets to avoid skewing your net worth calculation.
Neglecting certain debts: Don’t overlook any outstanding debts, no matter how small they may seem. Even minor debts can impact your overall financial health.
Your PFS is more than just a document—it’s a powerful tool for assessing your financial health, making informed decisions, and tracking your progress toward your financial goals. Refer to it regularly to stay on course and make adjustments as needed.
If you are preparing your PFS as you head toward practice ownership, Panacea Financial can help you be fully prepared for this next step in your career. Find other tips and information you should know as you take the next step in your career in our free “A Dentist’s Guide to Acquiring a Practice.” Download it here.
Michael is the President and Co-founder of Panacea Financial and is also a practicing physician in Little Rock, AR. After earning his BBA in Economics he deferred his medical school acceptance to teach middle school science in the Phoenix, AZ area while also earning his Masters in Education from Arizona State University. He then completed medical school at the University of Tennessee Health Science Center before finishing his residency at University of Cincinnati Medical Center and Cincinnati Children’s Hospital. With a faculty position and board certifications in both Internal Medicine and Pediatrics, Michael is able to treat patients of all ages and teach medical trainees in both inpatient and outpatient settings.
Panacea Financial Holdings partners with Primis Bank, Member FDIC, to deliver banking services through its Panacea Financial Division.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by Panacea Financial. Links are provided for informational purposes and should not be viewed as an endorsement
1. All personal loans have a $100 origination fee. To obtain a new loan with Panacea Financial, you must also have a Panacea checking account; there is no fee to open the account, a minimum deposit of $25 required, and there is no minimum balance. Other fees and charges may apply, see this link for full terms and conditions. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. All APRs assume a 0.50% discount with auto-pay from a Panacea Checking account. We offer a 0.25% discount with auto-pay from a non-Panacea checking account. To check the rates and terms you qualify for, click “Apply Today” and Panacea will conduct a soft credit pull to determine your possible rate and will not affect your credit score. Not all applicants qualify for the lowest rate or maximum loan amount; subject to credit approval. Total borrower maximum varies by stage of career and with credit score: In School maximum is between $1,000 – $10,000; In Training maximum is between $1,000 – $20,000; In Practice maximum is between $1,000 – $50,000.
2. No payments during the first year. For a 5-year term, you make reduced payments in years 2 and 3 of the interest accrued in the first year, added to the monthly interest. Full amortization years 4 and 5. For a 7-year term, you make reduced payments in years 2 and 3 of the interest accrued in the first year, added to the monthly interest. Full amortization over years 4, 5, 6, and 7.
3. For a 3-year term, you make interest-only payments in years 1 and 2. Full amortization in year 3. For a 5-year term, you make interest-only payments in years 1, 2, and 3. Full amortization in years 4, and 5. For a 7-year term, you make interest-only payments in years 1, 2, 3, and 4. Full amortization in years 5, 6, and 7.
4. Interest-only payments during first 6 months of loan. Full amortization over remainder of loan.
5. Adverse Credit Event: two or more payments more than 30 days late, totaling more than $500, within the prior 6 months; accounts with a total outstanding balance greater than $1,000 that are 90 or more days delinquent as of the date of the credit report, or that have been placed in collection or charged off during the two years preceding the date of the credit report; default determination during the five years preceding the date of the credit report; bankruptcy discharge during the five years preceding the date of the credit report; repossession during the five years preceding the date of the credit report; foreclosure during the five years preceding the date of the credit report; charge-off/write-off of a federal student aid debt during the five years preceding the date of the credit report; wage garnishment during the five years preceding the date of the credit report; tax lien during the five years preceding the date of the credit report; consumer credit counseling within five years preceding the date of the credit report.
