Personal financial management may not be taught next to Math and English in schools, but that doesn’t mean it’s any less important of a subject to learn.
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On that note, bookkeeping shouldn’t be a practice reserved only for businesses—not only does bookkeeping help you keep personal finances separate from that of your business, but it also helps you manage your personal finances better, in ways we share with you below.
It helps you identify your goals
If you have debts you want to pay off or are trying to save up for a car, a house, or a dream vacation, it helps to identify them right away, and budget your money with a little less pain.
Knowing what’s at stake will keep you focused on why you’re choosing not to spend on that cup of coffee and go for an instant instead, or why you’re not buying a new bag when your current one is just fine.
It lets you solve the mystery of where your money goes
Without keeping track, it’s impossible to remember what you spend on a weekly—let alone monthly, or yearly—basis. Before you can budget your money, you have to make sure you’re able to track what you’re spending on.
A spreadsheet will help you track and categorize your expenses; just make it a habit to list your expenditures at the end of a day. You can collect all your receipts in a plastic envelope, or take pictures of them to take note of later. Make sure you do the same for bills and statements.
It keeps track of where the money comes from so you’re not surprised, you’re prepared
Once you’ve identified your expenses, it’s now time to do the same for your sources of income. This could be from work, your parents, freelance jobs, or maybe even money you won from a lottery.
This gives you a clear picture of your financial situation and makes you more efficient in living within your means and enjoy a debt-free life with savings you can lean on in case of emergencies.
Read More: 5 Great Apps to Help Track Your Spending
Determine if you’re within or over your budget
Because bookkeeping is something you have to do every day to avoid it building up, you’ll always be able to determine if you’re spending within your means, or have an extra income you can treat yourself too (after savings, of course!). If you’re over your budget, adjust accordingly! Cut expenses where you can and funnel your income until your debt is cleared.
Being in control of your finances is much easier when you apply bookkeeping methods to a budget, and bookkeeping itself doesn’t have to complicated. Simply maintain the discipline of tracking your money every day, and you’ll be able to avoid unnecessary expenses such as past-due fees and ‘surprise’ expenses from little, yet accumulated things you may have forgotten spending on. - Alleli Aspili
Alleli is Senior Specialist for Business Development at Infinit-O, an ISO-certified BPO company that caters SMEs. She is responsible for maintaining Infinit-O, Infinit Contact, Infinit Datum, Infinit Healthcare and Infinit Accounting websites.
The views & opinions expressed in this special guest post are the author’s and do not necessarily reflect the opinions & views of MoneyMax.ph as a whole.