What does the Household Balance Sheet tell the client?

The purpose of the Household Balance Sheet is to provide a concise, easy-to-understand, and powerful planning diagnostic for assessing a client’s ability to achieve their financial goals. The Household Balance Sheet offers timely, actionable analysis and insights to make informed decisions about a client’s financial plan and have meaningful discussions about goal affordability, goal priorities, and spending vs. savings decisions.

 The Household Balance Sheet, like a traditional balance sheet, is divided into two sides, but as opposed to comparing assets to liabilities, the Household Balance Sheet compares:

1. Resources
2. Goals

Resources are the assets and income the client expects to have and use to fund their future goals, this includes assets that the client currently owns and future income that the client expects to receive.

Goals are the client’s future expenditures. A goal can be anything the client needs or wants to spend money on in the future, such as retirement or college. Each goal entered for a plan can have three different amounts entered to reflect different priority levels of spending for the goal:

1. Necessary amount
2. Target amount
3. Aspirational amount

Goals are organized into these priority levels on the Household Balance Sheet so that each level can be assessed for affordability.