We use money every day, so bookkeeping skills are never a waste. Not only can your bookkeeping skills open doors for your career, but they are also very practical for daily use. Find out how your bookkeeping skills can be used to help you manage and make the most of your personal finances:
1. Help yourself save money
Set a goal. It helps to have an idea about what you’re going to spend those savings on, as this will motivate you further. It might be something you need or something you want. Once you’ve decided on this, you can then calculate how much you need to save every month and budget accordingly to make it happen.
What’s your goal?
- Further your education
- Buy a car
- Make a down payment on a house
- Pay your child’s school fees
- Take a holiday trip
- Set up a retirement plan
2. Draw up a monthly budget
A monthly budget can do wonders for managing your month-to-month living expenses.
Start by making a list of your expenses, for example:
- Food costs
- Water and electricity
- Fast food/alcohol/cigarettes
- Medical aid/insurance
Once you’ve drawn up your list of expenses and added the amount you spend on each item per month, you get to the balancing. Balance your total expenditure (add up your expense list) against what you earn every month. What’s left over can be used for saving towards your goal. Hopefully, there is something left over from your earnings! If not, you’ll have to lower your spending costs in your budget. You can amend your list as necessary every month.
Put together a budget:
- Only once you’ve listed and balanced your expenses against your income, should you start drawing up a budget.
- Now you know whether you’re spending too much or not.
- Also, you know exactly what (which item/s) you’re spending too much on.
- Use the same list of expenses and decide on the amounts that you should be spending on these items every month. Write them down.
- If you are overspending given your income, you need to discipline yourself to spend less on some of those expense items.
- If you’re not overspending, add a monthly savings amount to your budget.
- Now that you’ve accounted for your spending and drawn up a budget, this is what you should try to stick to.
3. Manage your annual spending
Make a prediction
Estimate how much you think you will spend for the year, based on what you generally spend each month. It does not have to be an exact calculation.
Compare your prediction to what you actually spent
At the end of the year, ask yourself the following question: How far above or below my prediction was my actual spending? It’s easy to make this calculation if you keep consistent records of your spending.
4. Keep records
Know which months are harder
Drawing up a list of expenses (as explained in point 2) is all it takes. But – you have to do this every single month. You will then have a clear idea of your spending patterns. You can analyse which months are harder or more expensive than others, and come up with a plan for putting aside extra money to help you through those months.
Know which expenses are getting out-of-hand
Record-keeping can also make it clear when one expense is increasing without you noticing. This allows you to make informed decisions about where to cut down. Cigarettes and fast food are some of the common items that cost more than you think and can be so hard to cut down on!
Gain a sense of control
When you have all this information laid out before you, it may shock you! But it should also give you a sense of control. This knowledge will help you better organise your life financially in the future.
If you’d like to gain bookkeeping skills for your everyday life or for your career, consider enrolling in a Bookkeeping or Accounting course.