Financial accounting for non-entrepreneurs

Good day. I wanted to talk about household financial accounting, that is, about the family budget. Many have heard about this beast, someone even tamed him, someone in the process. And of course there are categories of people who say that all this is not worth a damn. For those who are interested, I ask under the cat.

Introduction

First, let's define what the financial accounting is.

Financial accounting is accounting for the availability and movement of financial resources of enterprises. So tells us the internet. But we do not have a company, so for us it is a little different.
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Financial accounting is accounting for the availability and movement of household finances.
And let's finally decide what we will take into account. For each person, depending on his goals, the resources will be different. Therefore, I offer my version of accounting resources.

Cost accounting

The very first accounting option that comes to mind is cost accounting. Many begin their journey with this step. Sooner or later, people have questions in their heads: “Where did the money go?”, “How much did I spend on ...”, “And when did I pay there for ... and did I pay?”. Everyone has different questions and at this level of accounting they all lead to cost accounting. People download trendy apps to their phone or get a excel file or simply collect checks. Everyone goes their own way, but everyone focuses on cost accounting. I myself also started from this very moment, I also downloaded the application, downloaded the application to my wife’s phone, set up synchronization and gave a lecture on why we needed it. I forced her to write down when she forgot, I forced her to record herself, I spent a lot on it to form a habit right after the expense, spend 10 seconds to record this expense.

As it was before: we knew where about 50% of the money was going, since these are precisely the main major items of expenditure. These are products, credit, cafe. Further dark forest began.
What it looks like now: all expenses are kept in the application and are recorded immediately after the expenditure. All expenses that are not paid immediately (they also sometimes happen) are paid by sms from the bank or approximately for memory. We know where the money goes.

What's next? We now have statistics on expenses for items. You can analyze the costs. But as they say, the appetite comes with eating. Already for the next period, we expanded our articles under the articles and collected new statistics and could optimize our expenses.

Cash accounting

This step was quite simple with respect to the rest. To account for cash, it was enough just to deposit the current balance and keep a record of income. But often here, many people miss one important point - debt. When you give or borrow, it causes a change in your cash.

As it was before: there was a cost statistics, there were desires for a change, there were changes, but there was no understanding of these changes.

What it looks like now: consumption movements have become more transparent and now it can be understood that the changes are related to our planned actions or in fact there was simply no money and the changes were not caused by us. Now I can say exactly how much money I have now and predict the balance at the end of the month or the date of receipt of salary. I can understand from the statistics of expenses if I can lend or if expenses are large, then will I have to borrow.

Budget

The next step is the desire to manage your cash flows. To do this, move from fact to plans. When you have only one source of income and often it is a salary, then it seems, why take it into account, plan? But for full you need this planned income. Moreover, you have not one item of income, but at least three: an advance, salary, vacation. Knowing the planned dates of each income movement, you can plan and expenditure movements. For me, this step was natural, but difficult. I did not understand why to make a plan for income, if it is obvious. But after analyzing the plan-fact for the year, I realized that I was very wrong. Every time you go on vacation, you get vacation pay, and returning to work you work without getting paid and it turns out that in the absence of planned accounting you can fly away into cons and feel the charms of the cash gap.

As it was before: large purchases from us were spontaneous and sometimes caused difficult financial times.

What it looks like now: I have an understanding of the movement of money a year in advance. I understand that force majeure can happen, for example, being fired, but this is already a question of the next stage and I have full understanding of it. My wife and I record the majority of purchases that are coming and we can determine when and what we will buy. We now have no cash gap and there is a program for accumulating the initial amount for a mortgage.

Planning scenarios

The next development step is various scenarios. At the previous stage, we used an optimistic plan for the development of events. But in life there are force majeure and they can be either with the sign “-” or “+”. Negative force majeure is for example a serious illness, dismissal. Positive force majeure is winning, inheritance, etc. And these events are also possible and even need to be laid in your plans. Thus, we have a pessimistic, optimistic and normal budget.

I would like to write about how it works, but have not yet reached this level of accounting.

Conclusion

Why did I write all this? As a child, no one spoke to me about money, my parents did not keep any records and lived without it. But the world is changing and with a superficial attitude to the loan it is easy to get into the cash gap. The world is changing and now we already want more from it than just to live. We want to live as we want. We want to control our life. For life, to achieve their goals, dreams, traveling, almost all of this needs money. And for me, the first step towards managing your life was a step towards managing your money.
Someone might say that the proposed accounting scheme is similar to budgeting and accounting organization and will be right. Because the purpose of these two disciplines is to plan their future, a reflection of the fact and an adjustment, and all this is very well suited for a person.