Final answer:
A balance sheet lists assets and liabilities. Create a monthly budget by tracking income and expenses. Develop a net worth statement by listing assets and liabilities.
Step-by-step explanation:
A balance sheet is an accounting tool that lists assets and liabilities. An asset is something of value that you own and can use to produce something, such as cash or a home. A liability is a debt or something you owe, such as a mortgage. Net worth is calculated by subtracting liabilities from assets. In the context of personal finances, you can create a monthly budget and a net worth statement by tracking your income and expenses and listing all your assets and liabilities in a spreadsheet.
To develop a monthly budget, you can record your income and categorize your expenses into different categories, such as housing, transportation, groceries, and entertainment. Subtract your expenses from your income to determine your surplus or deficit.
To create a net worth statement, list all your assets, such as cash, investments, and property, and their values. Then, list all your liabilities, such as loans and debts. Calculate your net worth by subtracting your liabilities from your assets.