Economic balance sheet

A household's full balance sheet: human capital and pension rights alongside financial assets, set against the present value of spending needs and debts. It shows risks that a list of investments hides.

Where you will meet it

Economic balance sheet appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Propose, and defend, ways to handle a family's financial risks as a whole through working life and into retirement
  CFA Level III · Private Wealth Pathway

  “Use the economic balance sheet: human capital, pension rights and financial assets against liabilities such as lifetime consumption, education, debt and bequests.”

• Construct a client's economic balance sheet and draw out what it implies for how assets should be allocated
  CFA Level III · Asset Allocation

  “An economic balance sheet widens the ordinary one.”

See also

Human capital · Present value

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with E · Glossary