Definition
A summary of your financial activities, including income, expenses, assets, and liabilities. It gives you a clear picture of your financial health.
What to consider
- Use it as a snapshot of your overall financial health.
- Review it periodically to track your progress over time.
- It can be a helpful tool when planning large purchases or loans.
Real world scenarios
- At the year’s end, Gina compiles a personal financial statement, tallying assets and debts to see if she met her net worth target.
- Entrepreneurs rely on up-to-date financial statements to pitch ideas and secure funding from investors.
- Lou uses weekly snapshots of his finances to catch overspending patterns, fine-tuning his budget month by month.
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