So, let's say you are not an Accountant and do not have any Accounting Knowledge. You have never ever been to an Accounting class and don't even understand the language. But you do understand money language right? Then hippppeyyyy! If you understand the language of money then you can be your own Accountant. If you understand Money language then you will know that is is very important to keep tracks of MONEY. You receive MONEY and you spend MONEY. Before we continue, let us look at ourselves and try to answer these simple questions;
1. What is (are) the Source(s) of my Income(s)?
2. What is (are) the Outlet(s) of my Expense(s)?
3. How do I record my Income?
4. How do I record my Expense?
5. How do I keep Money?
6. Are all my MONIES in the Bank?
7. Do I keep more MONEY outside the BANK?
8. Do I know my current Account Balances in the BANK?
9. What is my Cash Balance(s) in Bank and in Hand?
10. Can I maintain my own Financial Records?
I may not know what answers you will give to the above questions but let us try and simplify some basic things in RECORD KEEPING. In Record Keeping, two basic language are important, which are;
Now, try this from now henceforth; When you receive MONEY call it CASH IN and when you spend MONEY call it CASH OUT. So from now henceforth, I will replace INCOME with CASH IN and will replace EXPENSE with CASH OUT. Also, when you SPEND MONEY TO BUY ANY ASSET (Cars, Land, Shares, etc) we shall till call it CASH OUT and when you receive MONEY GIFTS from anyone we shall still refer to them as CASH IN. The whole essence is to TRACK how much MONEY (CASH) Passes through your HANDS and also to give proper account of them ALL.
So, with that we can CLASSIFY THE NATURE of our CASH IN and the NATURE of our CASH OUT. Before we Classify the NATURE of our CASH IN and CASH OUT, I will need you to follow the link and get our FREE EXCEL PERSONAL FINANCE TEMPLATE-1 on item number 6. This will help you customize the Template to suit the NATURE of your CASH IN and your CASH OUT.
From the Template you will see these two table below;
One of the Tables has the heading "NATURE". You will type in the various NATURE of CASH IN and CASH OUT. So, let's try to classify our CASH IN and our CASH OUT.
Let's assume that the NATURE/CLASSES/CATEGORIES of CASH IN are;
3. INVESTMENT EARNINGS
4. FAMILY HERITAGE
We shall just go ahead and type them under the table NATURE. If there are items there on the Free Template, you can delete them all and replace with these ones below;
Let's assume that the NATURE/CLASSES/CATEGORIES of CASH out are;
We shall just go ahead and type them under the NATURE of CASH IN. We shall then have a Table like the picture below;
These items on the Table represent the CATEGORIES/CLASSES of all that you will refer as CASH IN and all that you will refer as CASH OUT.
After identifying the NATURE of our CASH IN (Incomes and Money Received) and our CASH OUT (Expenses and Money spent), we need to break down the Different NATURES into their various ACCOUNT HEADINGS (This is an Accounting Language and I promised to make this simple). ACCOUNT HEADINGS are simply SOURCES of CASH IN and OUTLETS of CASH OUT. So, from the Natures listed above we can have the following SOURCES and OUTLETS;
Listing of ACCOUNT HEADINGS is not done at once. They come as you RECEIVE MONEY and SPEND MONEY. It is possible that you may be adding NEW SOURCES OF CASH IN and NEW OUTLETS OF CASH OUT on a daily basis. But the idea is that EACH SOURCE AND OUTLET you add must have a NATURE or CATEGORY.
After you have listed your ACCOUNT HEADINGS (SOURCES AND OUTLETS) and you have identified their NATURE (CATEGORIES) then you can be able to use the Personal Finance Template 1.
Get the Video Tutorials to enable you practice along side and understand better how this Template works and will guide you through out the rest of the Template;
GET THE VIDEO TUTORIALS HERE
After entering your day to day CASH IN and CASH OUT, you should be able to view your Monthly Reports without an extra effort as you have seen in the Video Tutorial. You can also be able to compare MONTH TO MONTH Incomes and Expenses and see how well you are doing. Keeping Record of Money you RECEIVED and Money you spend will help you TRACK YOUR PERSONAL FINANCE AND PLAN BETTER.
We hope this article on Personal Finance Check was helpful. Kindly leave a comment below. You can CONTACT US for Suggestions and any Questions on Accounting. Be the first to receive our articles. Subscribe Now! Cheers.
Also see our VIDEOS on HOW TO USE OUR BANK RECONCILIATION STATEMENTS TEMPLATE-1