Just the facts, Ma’am!
I’m taking an accounting class. It just started on Monday, but I’ve already learned so much about its importance in business – beyond just keeping track of how much money the business has.
It got me thinking about how much more accounting parallels budgeting than I ever realized!
Accounting uses facts to keep an updated picture of the business’ overall health. The facts are how much money it has, how much the business is making & spending, how it’s being made and what it’s being spent on.
These facts become useful information when making decisions about whether to continue the same type of spending, how much to spend & what to spend it on. Accounting information provides accurate information that goes a long way in helping businesses make the best possible financial decisions that impact them today and well into the future.
They use this information to decide when to hire, buy new equipment, raise prices, expand their business, cut back on expenses and so on.
Same goes for your budget. When we look at the facts about our personal finances as helpful information to base our decisions, those decisions become much easier to evaluate and the information provides an attainable path for reaching our goals.
Your budget can help make decisions like when to buy new clothes, go on vacation, start investing for retirement, save for a new car – and how much to spend. It can also help figure out when you can get out of debt, change jobs or start your own business – and how much you’ll need.
But, like accounting, it’s not enough to set up a budget – we must execute it on a regular basis. The creation sets up a successful system, but the execution provides the information that helps make us successful.
We need accurate facts to make the best decisions. Every transaction in a business, and in our lives, changes the facts. That’s why it’s so important to keep your budget up to date by monitoring and tracking.
An Accountant has a full-time job. Budgeters do not. Our personal transactions are nowhere near the scale of a business, so the time involved is probably the biggest difference between the two. It could take several hours to set up your budget – one time – but it only takes a few minutes to monitor and track, if you do it regularly and consistently.
I’m starting today with excitement, because I know what my budget can do for me – and I can’t wait to put it into action in many different ways!