We all have those moments. You open the credit card bill and blink. You look again and then check a third time to make sure you’re seeing correctly. Yet the number remains the same.
You start scrolling through the bill and as you look, you nod. “Yes, that makes sense.” “Oh right, I bought that this month!” “Wait – that was this billing cycle?”
Looking through the individual charges, the total starts to make sense. Mentally you note that you spent way too much on clothing this month or groceries or Amazon orders. You make the decision then and there to be more careful going forward. You pay the bill and promptly forget about the whole thing.
Until… The next month rolls around and the entire event repeats itself.
As a part of my job as the family office manager in my accounting firm, I provide bookkeeping services for individuals. I download all the bank and credit card transactions each month and categorize them in accounting software. Whether a person is looking to create a budget or just wondering how their money is being spent, it is invaluable to have a system to track spending and monitor cash flow.
When forming a new business, companies spend time and resources developing accounting systems and processes so that they can evaluate whether they are achieving their goals. If a company does not have proper accounting with accurate numbers, they have no measure of their profitability and growth.
Similarly, individuals need to gauge whether they are reaching personal financial goals. Am I saving money for retirement? Will there be an inheritance for my heirs? Or on a more immediate level – Can we afford to go on that luxury vacation this year? How will we pay for college for our children?
There are many online software programs which track cash flow and aggregate accounts so that one can view everything in one place. Mint.com is a great example of a software where you can list all your accounts and track expenses. For a person whose financial situation is complex, however, with other non-liquid assets, an outsourced service may be a good fit for you. By subscribing to a system of accounting for your personal finances, you will gain vital insights which will guide you to achieve your financial objectives.