Personal Finance: Balance
The balance sheet (balance sheet) is one of the most important reports for both organizations and individuals, that is, you and me. But, if everything is more or less clear with organizations, then when drawing up a personal balance sheet, many questions arise. And yes, very few do.
We will distinguish between Balance (document) and balance (equality)
For the first theoretical information about the balance, we should be grateful to Luca Pacioli, who in 1494 released his Treatise on Accounts and Records, which contained the first description of not only balance, but accounting in general. At its core, Balance is your financial photograph. If your balance sheet is correct, then I can look at it and tell if you are healthy or sick. In a financial sense. Balance is a combination of Assets and Liabilities. The most important thing you should know about him is that he is always there. Whether you can shape it or not. Assets are always equal to Liabilities. Now the most important thing is to figure out what are the Assets and what are the Liabilities of a person.
The assets that make up the Balance are the totality of all the property of a person. Liabilities are ways (sources) of financing Assets.
When I look at your Balance, I see what you own and what it cost you.
Example 1. You have 100,000 conventional cash units – this is an Asset. In the Passive, for this amount, there is Salary – 100,000 conditional units. That is, you financed physical property (cash) with your labor and time at work.
Example 2. You have an apartment worth 3 million conventional units. That’s right, it’s Active. The down payment was 300 thousand and you took 2.7 million in a mortgage. What will you have in Passive. Accumulated wages – 290 thousand rubles, interest on the deposit (on which you collected the down payment) – 10 thousand conventional units and a mortgage loan – 2.7 million conventional units. Thus, 3 million conventional units both in the Asset and in the Passive.
The sum of all Assets, as well as Liabilities, is called the Balance Currency.
BALANCE = ASSETS = LIABILITIES
BALANCE SHEET = ASSETS = EQUITY + LIABILITIES
The balance is formed at a specific point in time, and not for a period. Therefore, this is a photograph of the current state.
The balance may increase or decrease.
To form your Balance, you must collect all the information on your Assets and on your Liabilities. After that, we will do to draw up your financial plan.