Overview of Personal Finance Accounting

Money makes the world go ‘round. Well maybe it is not that important, but money is a very important part of many peoples’ lives. Everyone has bills that need to get paid, food that needs to be bought, and not to mention all the other expenses that arise on a regular basis. An accounting degree is very valuable because individuals like having someone take care of their finances for them. Luckily, a degree is not necessary for anyone looking to take care of their personal finances. It is even easier to handle your finances with the multitude of information that is available to everyone on the World Wide Web. With some general knowledge about basic accounting principles, a person can be well on the way to taking care of his or her money.

What may come as a surprise to some people is that accounting gets used without even thinking about it. It is amazing how willing an employee will be to handle money at work with great care, but as soon as it comes to personal finances, all those good habits go right out the window. With the recent economic ups and downs affecting individuals and families all over the country, taking the time to apply some good old accounting common sense can come in very handy.

People are often scared away from accounting because the bookkeeping aspect of it comes straight to mind. Caring for money is not slaving away over a checkbook for hours or staring at a computer screen full of expenses; it is about focusing on where the money goes and figuring out if that is really where it should be going. There are three principle aspects that everyone should have some basic knowledge of.

The first part of applying accounting to personal money is identifying everything that money is being spent on. Any time money leaves one person’s hands and goes into someone else’s, a transaction has taken place. It is the transactions that quickly flow to the back of the mind that lead to us desperately waiting for the next paycheck. The best way to get a better hold on spending is to fully understand when money is spent, where it goes, and how much is used.

This is where that bookkeeping image entered your mind. While it can be somewhat time-consuming for a person that has never done it before, writing down every money transaction is the most concise method of seeing where money is going. Fortunately, technology had opened up a wide array of bookkeeping methods whether you want to use a checkbook, a word document, or inexpensive software. With something tangible in hand, it is possible to perform a quick money analysis.

The last principle is sitting down and thinking about whether or not all of the money is actually going where it needs to be going. This can be a very difficult process for some people because poor spending habits can really stand out when put onto paper. Use this information to see how to better meet your money goals so that poor spending can be corrected. Fully understanding your particular habits will help you be more money conscious. By applying these basic accounting principles, anyone can get their finances under better control.