Everyone likes to save money. What most of us don’t like is what we have to give up in order to keep the coins in our coffers.
Cutting back on entertainment and dining out is not a fun proposition, but it’s better than having to limit the number of showers you take, keep the temperature of your home unbearably low in the winter, or go to bed early because you can’t afford to turn the lights on. Of course, there is another option.
When you take the time to track your income and expenses through standard bookkeeping practices you have a better chance of setting (and sticking to) a workable budget, as well as understanding your cash flow so that you can live within your means, set aside a rainy day fund, and still have some fun money.
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Here a just a few tips and tricks that should ensure your bookkeeping efforts pay off.
Try accounting software
You might wonder how spending money to download accounting software will save you money when you could just do your bookkeeping by hand.
But there are a couple of reasons why using an accounting program could be to your financial advantage.
For one thing, accounting software can do calculations for you, reducing the chance for clerical errors (supposing you enter numbers correctly). But there are also all kinds of free, open source, and inexpensive options for software. While QuickBooks is the most recognized, it’s certainly not your only choice.
Input data regularly
With our busy modern lives, it’s easy to set aside paperwork and leave it for later, but if you fail to input data on a regular basis, it’s not only going to get backed up.
Making for an overwhelming task when you finally get to it, but you may also forget to enter certain things, potentially throwing off your calculations or causing you to miss out on deductions when it comes time to file your annual income tax returns.
When it comes to keeping your books, it can be tempting to throw all the money in one pot, so to speak.
But this can cause some major confusion, whether you’re sharing expenses with a spouse or blending your business and personal funds. You’re better off creating separate accounts than having multiple cooks in the kitchen, as can happen when you share accounts, or confusing your personal and business funds by comingling accounts.
This will help to ensure that nothing important slips through the cracks.
Take a course
Although it isn’t generally that difficult for the average person to track income, expenses, donations, deductions, and so on for tax purposes, taking a couple of bookkeeping classes could certainly help you to learn the ins and outs of personal finance management.
Since most people never take accounting or finance classes in school, you could really benefit from a beginner course in bookkeeping, not to mention classes designed to teach you how to properly use your preferred accounting software.
Talk to your CPA
If you’re like most people you only make an appointment with a CPA annually in order to file your taxes.
However, if you want to get the most out of your income tax return it’s a good idea to see an accountant and talk to him/her about what you can do to get your books in order.
This will help you to save money overall, most likely, as well as ensure that you get all of the deductions you’re due when you file with the IRS.