Personal Balance Sheet

Your personal balance sheet should list everything you have and everything you owe, but the concept here goes far beyond just your financial assets and liabilities. We\’ll use this format to flesh out everything you need to think about for your personal finances and your life.

But first, some definitions. Assets and liabilities can be defined many different ways, but to be as inclusive as possible in building a personal balance sheet, I\’d like to define them very broadly:

• An Asset is something that will produce future value for you
• A Liability is something that will produce a future cost for you

These broad definitions can complicate the way you think about things – traditional assets, like cars, become a little more complex. But they do allow the most thoughtful and comprehensive approach to building your personal balance sheet.

I would argue that the ultimate measure of something’s value is how happy it makes us. That forces us to define our net worth in more than just financial terms, and it forces us to value our most precious assets far more than money.

Money is a part of your personal balance sheet, but it’s only a part. Use it to maximize your happiness with your family, your friends, and your time on this earth.