Proper personal finance means rock-hard discipline and sticking to a well-crafted plan.
The basics will take you a long way and implementing them may be much easier than you think, but there are some fine-tuning elements that can really make a difference in your financial development and enable you to reach your goals.
Here are 8 tips that will take you through the basics, but also delve into that much-needed fine-tuning for your finances!
What Is the Difference Between Business Bookkeeping and Personal Bookkeeping?
Business bookkeeping is the professional tracking of a company’s revenue, expenses, debt, and assets. This data is extracted periodically and turned into a report or a financial statement that can relay the status of the business. Based on this, you can create a plan to optimize the business and bring in as much revenue as possible.
Personal bookkeeping is essentially the same thing as business bookkeeping but performed in a less formal manner. The goal is usually staying on top of your personal finances and it mainly focused on expense management and budgeting. But is that enough if you want to thrive? How much further could you get if you treat your personal finances like a professional endeavour?
When is it time to go the extra mile?
The answer to this question is entirely up to you. You can start your financial evolution the moment you decide to become involved in this. Keep in mind that this will require your long-term dedication, but that it will surely help you thrive.
How can you take your personal booking to a professional level?
The best way to do this is to create a solid knowledge base, which you can do by signing up for an accounting course. This way, you can get structured information and make sure you don’t miss key elements that you might need for your personal finance plan. This doesn’t mean you have to go to college to do your finances. You can get everything you need by taking AAT courses online, which you can do in your spare time and from your personal computer.
8 Financial Tips That Will Make a Difference
Outline Your Financial Goals
Before you can start figuring out where you want to get financially, you have to create a list of palpable goals. Don’t be afraid to aim big because you are going to craft a long-term plan. Include goals like buying a house, a car, or starting a business, which you will consider to be major achievements one day.
Take Your Time to Understand How Credit Works
Regardless of what your chosen goals are, you are very likely to need a credit sooner or later. Getting credit can be a life-saving move, but it can also lead you straight into bankruptcy if you’re not careful with the small print. Before you take up even the smallest of credits, make you do your research about the in-depth consequences it has. You have to be fully aware of the aftermath of a credit plan before you sign off on it. This is where an accounting course could really make a difference.
Do a Full Analysis of Your Expenditure Patterns
To create a solid financial plan for yourself, you have to understand yourself from a financial standpoint. What is your potential, what is your regular income, but most importantly, what are your spending patterns? To find this out, you have to track your full list of expenses for at least one month. Start your analysis when you get your salary and then track down every single thing you spend money on. Remember that everything is relevant, from rent and all the way to those morning bagels! At the end of the month, look back and identify your spending patterns. What are your regular expenses? What are your largest expenses? What about the smallest?
Integrate Restrictions in the Areas Where You Overspend
Based on the financial analysis you’ve made, you have to identify your toxic spending patterns. You’re surely thinking about that morning bagel you buy every day. That’s most likely not a toxic pattern, especially if you enjoy it. However, the extra-large speciality latte you buy with the bagel, but always throw away half full might be something you want to rule out. Don’t expect to make huge changes from the first month! But do go on with your analysis on a monthly basis to find more of these small things you can correct in your expense patterns. Stopping them one by one will make a huge change in your overall budget.
Keep Impulse Purchases to a Minimum
Buying things makes you happy. Impulse purchases are the fastest way to an adrenaline rush and it can feel amazing, but it can also keep you from reaching your financial potential. Before you buy anything that is unplanned, you have to see how much it will affect your financial month. Will you still have enough money to put into your savings account? Can you deduct the amount by eliminating some other expenses? Think every expense through and you will stay on track.
You Simply Must Have a Savings Account
Saving money must become part of your regular financial plan. Even if you can’t afford to put a lot of money aside, you should open a savings account just to create the habit. You should think of a minimum amount you can save each month and do your best to actually transfer it to your savings account. You should always have a safety net to rely on.
Pay Off Your Debt Before Creating More of It
Banks typically present the fairytale version of credit. In reality, paying it off might be more complex than you think. This is precisely why it should be a priority to pay off any debt you might have as soon as possible. Moreover, you should avoid making your credit bigger because it can quickly snowball into something you can’t handle.
Create a Plan to Meet Your Goals
With these ideas in mind, set up your financial plan. Take it to a professional level by being as strict with yourself as your accountant would be. Create your bookkeeping report on a monthly basis and make sure you are sticking to the plan. Correct the toxic spending patterns you notice and always consult the plan before making large expenses.
Are you ready to take your personal finance to a professional level? Be your own accountant and treat your personal bookkeeping as seriously as you would for a business. Create a plan for reaching your goals and stick to it in the long run. Improve yourself financially each month and little by little, you will turn a massive profit.