Learning to Read Your Personal Record – It’s Exciting!

Learning to Read Your Personal Record – It’s Exciting!

Today it’s about a topic where I can well imagine that some will roll with the eyes:

Read your personal record.

Granted, this does not sound particularly sexy, but I guarantee you, at the end of this post not only has your perspective on your financial situation changed, but also on yourself.

What you read here is, in my opinion, essential to truly understand your path to financial independence.


  • (D) Reading a balance sheet: not just business fuzziness
  • Pictorial explanation of the basics
  • How a stock portfolio behaves in your balance sheet
  • How a self-bought car behaves in your balance sheet
  • You too are worth something!
  • Conclusion and what you can take with you
  • You think this post is good? Then support Homemade Finance!

(D) Reading a balance sheet: not just business fuzziness

When it comes to balance, one inevitably thinks of accounting, boring Excelklopferei and thickly bespectacled paragraph rider.


That’s how I felt for a long time, until I realized at some point that you can draw a balance for yourself (Wortwitz intends).

And here it will be interesting in my opinion, because a balance is so clearly the investment of a company but also persons dar.

What could be more useful in building assets than showing it clearly from time to time?

Pictorial explanation of the basics

I do not want to bore you with unnecessary details for reading a review, I limit myself to the bare minimum.

Here is just a simple graphical representation:

Links (one says for this side also assets) stands your fortune.

Right (liabilities) is how this property was paid. Either from your own pocket (called equity) or borrowed money (called debt).

In addition, there is one more but very important rule:

The sums on both sides must always be the same size. Always.

If not, then the maw of hell will open and erase everything that is dear and dear to you.

So be sure to take care of that.

That’s basically it, that’s a balance sheet.

Here is a small example of how a simple balance sheet might look like:

read balance example


As we can easily see, a condominium, a custody account as well as bank balances can be found on the side of the property.

On the right side there is now only equity and no debt. The one who owns this balance is currently debt free, so much we can say before.

Last but not least the Hellmouth Rule is also fulfilled, on both sides the sums are the same, so all right.

How a stock portfolio behaves in your balance sheet

What makes a statement so valuable to us is the pretty graphic representation of how consumer debt differs from investment debt. However, one by one.

Let’s take the stock portfolio from the example above:

Imagine, the market value of this portfolio remains unchanged but over the next year, it will give you dividends of € 1000 which your broker will transfer to your bank account.

Then we can observe the following change in the balance:

read the dividend balance sheet

As we can see, the sums do not match. Only at the sight I am already completely afraid and anxious. I can almost feel like it starts to get warm behind me.

So that the balance rises again, there is now a new special sub-item on the right:

The annual surplus. This also belongs to equity.

dividend balance sheet (1)


Phew, better.

Because what happened here? Our wealth has grown by € 1000, while on the right side has done nothing, in the sense of there was no debt or the like.

So we are 1000 € better than before. Profit. Hot.

How a self-bought car behaves in your balance sheet

You may hate me for this statement, but most of what we possess is simply becoming worthless stuff.

Day by day, month by month and year by year, it is losing value all the time. That applies to almost all things of consumption.

Take, for example, a privately used car. Make fun, be smart but it loses value.

Let’s go over this in a nutshell:

Step 1: You have before to buy a car, so your financial position looks like for the time being:

car in the balance

2nd step: You bought your car. Price was 10.000 € and in the beginning we assume for the sake of simplicity you could resell it immediately at the price. So it’s worth 10.000 €.

car in the balance sheet (2)

So far so good, but after a year, your car will already be worth less than at the beginning. If it loses 1000 € in value in a year, then the situation looks like this:

car in the balance sheet (3)

So that the hell rule is fulfilled on both sides, it needs a negative net income, also called annual deficit.

You too are worth something!

No, I do not mean your organs, I would not necessarily include in my balance sheet now. Especially since most of us would be hard to estimate a price for it.

Rather, I mean your worker and education. Because these produce similar to ETF or real estate cash for you and improve so ultimately your personal balance sheet.

personal balance

Here are many unknowns, because the exact value of your work or training can not be quantified exactly. But you can try to increase the value by various measures.

Conclusion and what you can take with you

What I do not want with this article is to urge you to meticulously update your balance sheet every day.

That makes no sense, is boring and brings nothing.

Rather, you should at longer intervals (from me once a year) times to check briefly how your financial situation has changed and whether that was good or bad.

Even before larger purchases, it can help to present the effects so briefly.

In addition, I would like to recommend again my article on ” You yourself are your best investment ” to the heart, because in my opinion, your personal balance just does not end with the miserable enumeration of money and material things.

On the contrary, there are also intangible assets, such as education / training, your workforce or simply certain skills.

Consider whether this is an investment and whether it generates cash or money for you in any way.

Consumer or capital goods, that’s the question.

In my opinion, reading a personal balance sheet is even something very exciting.

Because it helps you to better understand yourself and your path to financial independence.