A personal financial statement defines an individual's net worth and provides a comprehensive overview of one's financial picture over a given period of time. It lists all of a person's assets, such as cash and investments, and liabilities, such as mortgages, student loans, and credit card balances. The statement also shows how much money a person has available, or their net worth.

Net worth is calculated by subtracting a person's liabilities from their assets. For example, if an individual has assets of $100,000 and liabilities of $50,000, his or her net worth is $50,000. It's important to note that a person's net worth can fluctuate over time, depending on changes in the value of assets, such as stocks and bonds, as well as liabilities, like credit cards.

A personal financial statement can be used to track one's financial progress over time and to set and track financial goals. For example, an individual may want to increase the value of their investments or pay down their credit card debts. Tracking the value of their assets and liabilities over time, along with their net worth, can help inform how their financial plans are going and if adjustments need to be made.

Personal financial statements can also be used in the event an individual applies for credit. When seeking a loan or other type of credit, lenders often ask for a personal financial statement as part of their approval process. This ensures the borrower can commit to the full loan repayment and will be able to make their payments on time.

Although they are included on a personal financial statement, income and expenses are typically tracked separately on an income statement. This helps provide a comprehensive view of one's financial position, in addition to other aspects, such as their spending and saving habits.

A personal financial statement is a powerful tool to help individuals track and stay organized with their financial goals. It provides a bird's-eye view of all assets and liabilities in one document, allowing for easy comparison and tracking over time. This is useful for those who want to plan and adjust their finances accordingly. It is also useful for those who need to provide a personal financial statement to apply for credit, as it can serve as an important part of the approval process. As such, individuals should review their personal financial statements often and adjust their financial plans as needed in order to keep their finances on track.