The Importance Of Personal Accounting

When it comes to personal financing, accounting plays a vital role and it is significant for every individual to have the basic knowledge of accounting, which includes learning the valuation methods, common terms used in accounting fields that will help every individual to make smarter choices regarding financial decisions. In this essay, I am going to discuss what accounting means and how it helps me manage my personal finances, describe the three products of accounting and bookkeeping procedures that are useful in personal financial planning and how personal financial software could assist in my personal financial decisions.

Accounting is the systematic and comprehensive way of recording a financial transaction or it is the method used to

The collection of data could be carried out by personal paper record book, account software or a spreadsheet to record transactions on a daily, weekly or monthly basis depending on how we want it. The three accounting products (financial statement, cash flow statement and balance sheet) and bookkeeping procedures is simple to comprehend and they involve keeping receipts of every transaction or use the checkbook or the bank statement to track the all records. Furthermore, collating the summaries of the income and expenditure reports through the use of ledgers and thereby use the summaries to generate financial reports that will reveal my current

and I will be able to gain access to it at any point in time. In a nutshell, the personal financial software will help me to gather, classify, arrange, and report my financial data in order to make final appropriate personal financial decisions. (Siegal & Yacht, 2009, p. 42-47)

In conclusion, having the basic knowledge of accounting, bookkeeping and using personal financial software will help every individual to understand their present financial situation, keep track of their everyday transaction by logging, categorizing and reporting the transactions. Finally, it helps to curb overspending, reduce obligations, avoid debt, and remove or minimize financial anxiety. (Personal Finance and Money, n.d.)

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References

Personal Finance and Money. (n.d.). What are the advantages of doing accounting on your personal finances?. Retrieved November 29, 2017, from https://money.stackexchange.com/questions/73376/what-are-the-advantages-of-doing-accounting-on-your-personal-finances

Siegal, R. & Yacht, C. (2009). Financial statement. In Personal finance (pp. 41-66) Saylor Foundation. Licensed under Creative Commons CC BY-NC-SA