Your personal
balance sheet.
Use a personal balance sheet to track your assets and liabilities and consider how financial decisions affect your human capital.
You have assets (what you own), liabilities (what you owe), and the difference is your net worthnet worthEverything you own (assets) minus everything you owe (debts). The most comprehensive measure of financial health.Full definition. But the most important asset, your future earning power (human capital), doesn't show up on any statement. This page is the mental model that connects every other page: order of operationsOrder of operationsA default sequence for spare money after essentials and minimum payments: a starter emergency fund, any employer retirement match, high-interest debt, a full emergency fund and tax-advantaged accounts (HSA, Roth IRA, more 401(k)), then taxable investing. Vesting, unstable income and near-term goals can shift it.Full definition, debt payoff, investing, insurance, estate planningestate planningOrganizing your assets and legal documents so they transfer correctly and efficiently when you die.Full definition, and Bitcoin all live on this sheet.
On this page
Assets: what you own
| CATEGORY | EXAMPLES | LEARN MORE |
|---|---|---|
| Cash & equivalents | Checking, savings, HYSA, money market | Banking |
| Tax-advantaged | 401(k), Roth IRAIndividual Retirement Account (IRA)A retirement account with tax advantages and eligibility rules. Traditional IRA contributions may be deductible; taxable withdrawals generally enter income. Roth contributions use after-tax money, and qualified Roth withdrawals are tax-free.Full definition, HSAHealth Savings Account (HSA)A health savings account available only when eligibility requirements are met. Federal tax benefits depend on contribution limits and qualified medical expenses. Health coverage, other coverage and Medicare enrollment can affect eligibility; state tax treatment can differ.Full definition, 529 | Accounts |
| Taxable investments | Brokerage: index funds, individual stocks | Index funds |
| Bitcoin | Self-custody BTCBitcoin (BTC)The ticker symbol for Bitcoin, used on exchanges and in price quotes.Full definition, Bitcoin ETFExchange-Traded Fund (ETF)A basket of investments (stocks, bonds, or Bitcoin) that trades on a stock exchange like a single share. shares | Allocation |
| Real property | Home at gross market value; mortgage listed separately below | Housing |
Liabilities: what you owe
Liabilities have an interest rate and a priority. The rate determines whether to pay them off or invest instead. The priority determines the order. Debt payoff order covers the full framework.
- Credit card debt (15-25% APRAnnual Percentage Rate (APR)The yearly cost of borrowing money, shown as a percentage.Full definition), pay this first, always
- Student loans (4-7%), depends on rate vs expected market return
- Auto loans (5-8%), the gray zone
- Mortgage (6-7%), usually keep and invest, but rate-dependent
Human capital: the hidden asset
Your future earning power is your largest asset early in life. A 25-year-old earning $50,000/yr with 40 years of working life has about $1.16 million in present-value human capital at a 3% real discount ratediscount rateThe rate used to convert future money to today's value. Higher discount rate equals future money worth less today. In personal finance: typically your expected investment return, what you give up by spending now instead of investing., the rate the human capital page uses (about $0.99 million at 4%). That dwarfs any portfolio balance.
Human capital explains why career investment, salary negotiation, and disability insurance matter more than stock-picking early on. Disability insurance protects the asset side of the sheet.
Net worth = assets minus liabilities
Net worth is assets minus liabilities. It measures a balance sheet, not whether cash is available for next month’s bills. Read it alongside cash flow, accessible reserves and upcoming obligations.[1]
Where every decision lands
- Order of operations, which lever to pull next on the sheet
- Debt payoff, reducing the liabilities side
- Bitcoin allocation, where BTC sits among your assets
- Insurance, protects the asset side
- Estate planning, what happens to the sheet when you die
Net worth and usable money are different
Use gross market value for a home on the asset side and its outstanding mortgage on the liability side. Do not subtract the mortgage twice. For example, a $300,000 home and $220,000 mortgage contribute $80,000 to net worth, before selling costs. The SEC recommends listing assets and debts separately and updating your statement at least once a year.[1]
Liquid net worth: for this worksheet, cash plus readily saleable unrestricted investments, minus all liabilities. Exclude the home, vehicles, private business, future earnings and restricted retirement assets. This is a disclosed planning definition, not a universal accounting standard. Example: $15,000 cash + $10,000 taxable investments − $8,000 debt = $17,000 liquid net worth. If a $220,000 mortgage is also owed, this measure becomes −$203,000; that is not a demand to repay it today. Separately track cash available after this month’s bills.
Record balances on the same date, save the valuation method, and review quarterly or after a major change. Investments can fall or take time to sell; allow for taxes, selling costs and restrictions. A positive net worth is not an emergency fund.
Where to go from here
Sources
Bracketed numbers in the text link to these sources. Figures, rates and rules change: check each source’s date before acting on it.
- SEC Investor.gov, Figure Out Your Finances ↩
Last updated . Not financial advice · Verify · Disclosures · How pages are reviewed