Private balance
In a private balance sheet , the assets and liabilities of a private person or a private household are determined and compared at a uniform point in time. The household's equity is derived from the balance of assets and liabilities . The private balance sheet is an important methodological basis for drawing up private financial planning .
Building a private balance sheet
Similar to the commercial balance sheet of a company, a private balance sheet consists of two columns: on the left are the assets (assets) of the household, in the right column the liabilities and equity (liabilities).
Principles of drawing up a private balance sheet
In contrast to the commercial or tax balance sheet of a company, there are no legal regulations for the design of a private balance sheet, there is great freedom of design. Based on the principles of proper accounting , (non-binding) principles have also been established for the preparation of a private balance sheet:
Principle of clarity and clarity
The private balance sheet shows the assets of a single person, a married couple or a family for a specific reference date. It must be clearly identifiable which persons were included in the balance sheet and for which point in time. As a rule, assets are broken down into asset classes - such as liquidity, stocks, bonds and real estate - or according to types of investment - such as securities, equity investments and life insurances - and listed from top to bottom in decreasing liquidity. The liabilities on the right-hand side are broken down according to maturity or purpose.
Principle of individual assessment
All assets and debts are valued and reported independently of one another; no offsetting is made.
Market value principle
When valuing the assets, the full financial and business assets are taken into account with their market value on the balance sheet date, not with their book value , as is usual with a company balance sheet . Past acquisition costs or expected future changes in value are not taken into account. When drawing up a private balance sheet, losses or increases in value in the past are often uncovered that those affected were not aware of.
Principle of continuation
In the private balance sheet, assets are valued at market prices. The actual sales proceeds of an asset can, however, be below the market value for various reasons: It can be reduced by taxes and fees; Claims could fail if you try to catch them now; With immediate repayment, credits can be subject to prepayment fees. When approaching a private balance sheet, these factors are not taken into account. It is assumed that all asset positions will be retained ( continuation principle ).
Realization principle
Assets that cannot be used in the long term and whose value can only be determined very imprecisely are not included in a private balance sheet as long as they are not realized. This applies both to human and social assets (value of training or “good reputation”) and to the present value of pension entitlements. Tangible assets are only included insofar as they can be used and are not used to lead a life. Therefore, the value of the household effects and the family car is usually not accounted for. Real estate, works of art, unusual jewelry and luxury items are usually considered.
Analyzes based on a private balance sheet
Numerous insights can be gained from a private balance sheet:
- the extent and nature of existing investment risks
- the asset structure
- the degree of asset diversification
- the level of indebtedness of the household
- the budget's degree of liquidity
- Legal ownership amount (total assets)
- Amount of actual economic "wealth" (equity)
In combination with data from the private profit and loss account , additional information about the return on investments or the amount of loan interest and repayments can be obtained from a private balance sheet.
Areas of application of the private balance sheet
- A private balance sheet can be created for points in time in the past, present (actual balance sheet) or future (planned balance sheet or target balance sheet). In the context of private financial planning, the comparison of these balance sheets allows necessary changes and appropriate measures to be identified. By updating the private profit and loss account and liquidity calculations, the impact of measures on future balance sheets can be calculated and their effectiveness assessed (scenario calculation).
- In Germany, according to Section 18 of the German Banking Act , credit institutions are obliged to check the borrower's income and assets when granting larger loans ( credit check ). For this purpose, banks can, among other things, submit a private balance sheet and a private liquidity calculation - or they collect the necessary data.
literature
- Günter Schmidt: Personal financial planning - models and methods of financial planning . Springer, Berlin 2011, ISBN 978-3642204586
- CFP Board: Financial Planning Competency Handbook . Hoboken 2013, ISBN 978-1118470121
- Jan Buschmann: Private financial planning: Analysis of the process in private financial planning . GRIN Verlag 2008, Kindle Edition
- Jörg Paßmann: Key figure systems for private assets and finances: Transfer options for operational instruments . GRIN Verlag 2012, ISBN 978-3869431819