Personal Finance Accounting – The first step to financial freedom

What do you think is the reason of great financial inequality between people? 

It is obvious that all people vary with their income. But it is not the only distinctive feature. Another surprise because of those who earn the same amount of money as you, but whose budget is bigger. Sounds like a paradox? Well, the reason why some people have more money than other is that they account their finances.

The simplest operation that we do after we get a salary is simple money spending. You remember the approximate sum that you can spend and you do it. You may delude yourself that you actually are attentive to the moments when you spending your money, but if you keep a track of expenses you will surprise how deeply you were mistaken.

It is true that the budget dictates our way of your life. If you want to be in charge of your life you must learn how to account your personal finances. It is not so complicated as it seems to be from the first sight.



Start noting your earnings and expenses

personal-finance-2The basis of financial planning is to record the movement of your finances. Start making notes in your notebook or excel table to see the clear picture of where does your money go. In such a way you will notice on what categories to waste more and what expenses you can avoid. Then try to plan your budget for the month.


Do not account all small expenses

Most people give up in their personal accounting because they can’t stand spending too much time on it. In fact, this business does not require much time. You do not need to fix every expenditure to the deepest details. There won’t be much effect if you note that you have spent $15 on custom essay writing company whilst you spent $50 on bowling. Focus on the most important things. However, if you notice that the reason for your low budget is a series of insignificant purchases, pay attention to it.


Categorize expenses

There are more or less necessary things on which we spend money. Try to divide things on which you waste your money into several categories and prioritize them. For instance, you can create such categories as “housing”, “food”, “clothes”, “hobby”, “entertainment” and just add spent sums to the list. If you find out that you have spent too much on the stuff that belongs to the least prioritized category, cut money waste that became a reason of a hole in your budget.



Use budgeting apps

personal-finance-3After the moment you familiarized yourself with the ways of how to lead personal accounting you can proceed to new levels for it. For example, you can upgrade your financial plan for the next months. Or you can create an investment plan for 2017. Moreover, you can use modern ways to save your income and make an effective budget plan. I offer you to use applications that help people to handle their finances.

For example, Mint is considered to be the best app for budgeting by many users. It is a popular service to control personal expenses that enumerates 14 million users that work with US banks. Mint connects in one system all financial accounts of a user: bank account, credit cards, car credits, etc. All data about the financial state of the user is recorded, categorized and is presented in graphics. After these operations, Mint gives recommendations on how to plan budget and manage finances in the most effective way.

I also suggest you download another popular app that is called Toshl. It will come in handy if you want to categorize where your money goes. There is a simple tag system through which you can keep account of your expenses. In case you waste too much money within some category an app will send you a notification. Toshl also notifies to update financial data.

So, stop waiting till your salary rises because your expenses actually grow much faster. Personal accounting will make you financially free. It is not a just excuse that you do not have a personal accountant. You do not need him because you can do everything on your own. As you see, there are simple ways of how can you manage your budget. Do not try to practice all of them simultaneously. Use them gradually and find the option that matches the best with your lifestyle.



About Author:

Robert Everett: I am a freelance writer currently based in Chicago. Solving students career and university problems. Having an interest in marketing and business.

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