AD | Collaborative post
Whether you’re in business, looking at career options, or just want to get a better grip on your personal finances, understanding how accounts work can help.
A good set of accounts is much more than columns of numbers. It shows you where money’s coming from or going and contains lots of information for good financial decision-making – for savers and spenders alike.
The Reasoning Behind Accounting
Householders often don’t get how keeping accounts can help, but they’re not alone. Plenty of small business owners don’t take full advantage of everything their accounts can tell them either.
Once you take the time to learn how accounting relates to life, you’re able to:
- Make smarter spending decisions: You’ll see exactly where you stand with money and not have to agonise over whether something is affordable or practical. You’ll know immediately and can take the appropriate action.
- Understand how your money is performing: You’ll spot areas of waste and be able to identify places in your spending habits that could do with changing.
- Budget properly: Too often we think of budgeting as being another way of inflicting financial pain. But unless you’ve got a bottomless pit or a magic money tree, everyone must budget to some degree or another.
Everyday, Practical Money Advantages
Business owners need to know where they stand with money, and so does everyone who manages daily, personal finances.
Here’s how keeping your accounts in order can help with everyday practicalities:
- Controlling cash flow – it’s often a business term, but it applies equally to households. If you’re not earning all you could, keeping expenses under control or spotting possible future troubles, you could end up with more month than money. And that’s painful.
- Better banking – you’re in a much stronger position to approach the bank (or anyone else who may help financially if you need it) when you can demonstrate a clear understanding of how your income relates to your outgoings and can show financial awareness.
- Costing projects, improvements, adventures, or expansions – whenever you want to do something outside your normal financial expenses, a good accounting history can help you find the right time to do it, estimate an appropriate cost or price and find ways to fund the bigger expenses. You might need to juggle things around, and accounts make it easier to find the places where juggling is feasible.
An Easy Way to Get Personal Accounts Started
If you just want to dip a toe in and learn an easy way of managing and tracking your personal finances, here’s a quick guide to getting started.
You’ll just need a spreadsheet page or a notebook and pen. Nothing fancy. Make four columns and head them with Date, Item, Cost/Income, Balance.
It’s super simple. Get the information for the balance column off your latest statement and write how much is available at the top. As you fill in the other columns (every time you buy something or pay a bill) update your balance column. You can start a new page each week or month, it’s up to you, but always start the new balance column by transferring the amount at the end of the old page.
Don’t forget to add in your direct debits each month. You could do this at the start of the month, so you know exactly when bills are due and their amount.
A New Career Option?
Accountants and bookkeepers are in hot demand. Every business on the planet must keep a set of accounts, and most of them want help with it.
With a qualification in accounting, the world is practically your oyster.
You could seek employment in the finance department of just about any industry sector that appeals to you, or you could set up your own accountancy firm. If you’d prefer a less pressured work style, you could even work part time by offering bookkeeping services on a freelance basis.
As a qualified accountant, you’ll command a good wage throughout your working life, and find job security in a respected profession. If the idea appeals but you don’t have the luxury of time for in-person study, an online accounting course would be another way in. There are always options.
Hopefully we’ve given you a reason or two to take a fresh approach to accounting, whether for yourself personally or as a career or business advantage.
Digging into accounts and taking control of them is a winning strategy for everyone.