Your Personal Financial Statements
Just as companies have an Income Statement and a Balance Sheet (covered in tackl.finance’s fundamental analysis note), individuals have direct parallels — and this guide builds both. Income (active, from ongoing effort, vs passive, from assets already owned) minus Expenses (fixed vs variable, essential vs discretionary) is your personal income statement, determining your savings rate. Assets (everything you own with value, including often-overlooked ones like your home) minus Liabilities (debt, with a “good debt vs bad debt” framing tied to compound interest from Topic 5) equals Net Worth — your personal balance sheet, and a far more complete measure of financial position than income alone. We explain how these two statements connect — your savings rate is what changes your net worth over time — and why tracking net worth periodically, as a trend rather than a single snapshot, is one of the most useful habits in personal finance.