The Importance of Accounting for Your Income

Hello!!๐Ÿ˜Š

Sooooo.. I really started accounting for money at an early age and so I understand that this concept might be new to a number of people but I hope this helps…

When I first moved here, my father used to make me account for how I spent my pocket money. ย I used to be so upset because he made me go into so much detail. They included items such as ‘tomatoes- $3’(Don’t laugh).ย I do not need to explain how grateful I am to him for this.

Okay, so quickly, the importance of accounting …

I feel like accounting for your money:

  • Gives you a general idea of what you are spending your money on- ย I know these days, banks show you what you spend your money on which is absolutely amazing but sometimes you actually just want to know what you spent your money on and not just the general umbrella these transactions are classified under.*Curious mind*
  • Helps you spot bank errors and charges- I was able to get back all the overdraft fees I was charged on my credit card in the month of May and June because I noticed discrepancies. I had to find a long term solution but in the meantime, I got my unnecessary bank charges back!
  • Helps you figure out yourself- Like the saying goes, put your money where your mouthย heart is.:)
  • Monitor the use of your money (General Knowledge)- Does this ever happen to you? You check your account balance expecting a certain figure and discover that what you see is WAY LESS than you expected. I really like to know where, how and what my money is being used for so, accounting for it really works for me.
  • Great for achieving savings goal or huge expenses- I recently just got a ticket for a trip. Looking at my accounts and reviewing what I spent my money on, I was able to cut down costs in order to save up for this trip!
  • Helps you plan how to spend your money in the future (BUDGET)- How do you plan how to spend your money when you don’t know what you spend your money on?Now, your account is a reflection of the true costs of things, well, I like to think it gives you a general idea. If you have no idea what things really cost you might just end up with an unrealistic budget which may be overestimated or underestimated.
  • Helps you cut down on unnecessary costs- Looking at my accounts for June, I realized that I was paying for an antivirus on my computer (that I was barely using), phone insurance, iCloud storage and a bunch of “Just $3ish monthly purchases”. Those $3 purchases add up trust me and you really need to ask yourself whether these charges are worth it. How do you even know they exist if you don’t take the time to find them out?
  • Makes you feel better- I feel a lot better after I have done my accounts. Like-“hey, that was a rough financial month, lets try and do better this month!”
  • It is a resource acquired, so why not?

Shasha’s Tips On Making A Personal Financial Account Statement

Screen Shot 2016-08-16 at 9.12.40 PM
My typical template
  • Try to limit your spendings to cards (which are pretty easy to monitor). Now, I know that there are card swipe limits and fees associated with card usage. But if you have unlimited card swipes (Student benefits), this is something you should consider. It makes life a whole lot easier.
  • If you carry cash- Keep ALL your receipts. Even if you don’t carry cash- still keep your receipts.ย (What if you need to return the item purchased or something?)
  • Whether you decide to do your accounts annually or monthly or bi-weekly or quarterly, it is all up to you! Just Do IT
  • Tools- Sheet(s) of paper, calculator and a pen (I like to keep it simple)
  • Divide your expenses into categories however be specific. I like to differentiate between eating out and groceries, ย it just gives me a general idea of where my money is actually going to. (In the past, I always ended up spending way more money eating out than I actually spent buying groceries)
  • Include your income and then subtract your expenses from your income. This is really helpful because you could end up spending from your savings or even living on credit.(GUILTY!!) If the balance is negative, you probably want to look at your accounts/financial spendings again.
  • Account for EVERYTHING- it is totally okay to have columns labelled ‘lost money’ or ‘unknown’.
  • Finally, review your accounts and plan accordingly!

I hope this has been helpful and insightful. I look forward to hearing from you on your thoughts on accounting and tips on accounting your personal expenses.

Talk some other time

Shasha

 

11 thoughts on “The Importance of Accounting for Your Income

  1. Thanks Shalvah for this write up. Many of us freeze when we are to account for our resources because we think it is complicated. Thanks for simplifying the process and especially for highlighting the benefits. As I will like to feel better and more in control of my finances, I am setting up a spread sheet to start tracking.

    Like

  2. Great article, Shasha, but I’m wondering why you lumped together loan and beddings in your template. Just curious as I do not see the connection between the two. Regardless, I find the article very useful. Thanks for sharing.

    Liked by 1 person

  3. Great piece, my girl. Glad to see you activate and share your learnings. I believe many will be enriched by this and work on this key requirement of responsible living. Kudos! I agree with Isang; you need to separate beddings from loan.

    Liked by 1 person

    1. Thank you, dad. Like I explained to Mom, these are nonrecurring expenses and in the excel table, I have notes to differentiate them in each cell. Now that you point it out- I am going to change my format. Thank you for the correction.

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  4. Funny enough, that was my plan this year (it still is… I think), but I kept on procrastinating and now I have a drawer filled with receipts since January! (At least I got that part right)

    In the words of Barney Stinson ‘CHALLENGE ACCEPTED!’

    Liked by 1 person

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