Why Do Personal Accounting
Have you ever been in a situation where entries have appeared on your bank checking account statement and you have no idea what you spent the money on? I know that that used to happen to me. Most of us do carry out some basic checking when we receive the statement each month but we should be making a more thorough effort of it.
Of course the first thing to do is to make sure that you record every check and other expense that you write or make. It is so easy to forget the odd one and I can never remember what it was for when I go back to check it later.Then there are always the fees that you do not know about.
These include charges for using the ATM, fees that apply when you go overdrawn, you may have requested a special transaction and sometimes there is even a charge for each deposit you make. Check out that each charge that appears is valid and legitimate.
Also keep a record of any transactions into your account even though you would not mind some extra money appearing and you would not be as worried as the other way around. Sometimes we get regular payments coming in or dividends from the banks own share schemes and you may have requested a refund for goods you were not happy with. If your checking account offers you interest, make sure that they do pay it to you and that it is the correct amount.
You will usually find that the statement and your records do not balance the first time that you look and you have to go through everything to find the discrepancy. Fortunately, most times it is in my record keeping but the banks do make some errors as well.
Every year we have to fill in and send off our federal returns for income tax. I am sure that most of us do not look forward to that exercise. Whether you are doing it yourself or you have a professional accounting company do it, the records that you have kept on a monthly basis will come in very useful.
The basic things that you need to keep track of are:
Your income – this includes the salary from your regular job and any part time work that you do as well. Income that you receive from assets in the form of rental income from real estate or dividends from your stocks and shares are also recorded here.
Allowances – There is usually a certain amount that you can earn without paying any taxes on it and you may also get a child allowance or other similar.
Deductions – Particularly if you are running your own business you will be allowed to set off normal business expenses against your income. This can also sometimes include mortgage interest payments, taxes on property and any donations you have made to charity.
When you have calculated your total income and deduct all your allowances and deductions you will get a figure which is your taxable income. That is the sum of money that you will have to pay tax on and because you have carried out a regular personal accounting system you can be sure that it is correct.
We used to have to wait for that statement to drop through our mail box but we do not have to do that any more. With the increase in internet banking facilities we can keep up to date on a daily basis if we so wish. It will allow us to pick up any discrepancies more quickly.
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Hi there! when it comes to personal finance, i see to it all banking statements and as well as transactions made are all compiled. But in this case, how can i rid of it? Should i choose banks? Or maybe taxes are deducted automatically.
Shika Lachica recently posted..Accounting Software
Shika, the banks will keep records as will the tax people, but they do not always get it right so keep your own as well.
Thanks Trevor! I will surely must notice my transactions.
Shika Lachica recently posted..Best Accounting Software
I would suggest you to keep a record of any transactions into your account even though you would not mind some extra money appearing and you would not be as worried as the other way around.
Twitter: AnnCapatino
says:
Hi Trevor,
Great contribution to bring continued awareness to an extremely important subject. We loose thousands every year from carelessly not checking our bank accounts thoroughly. And, the online service offered by banks is invaluable to a good personal accounting system. You can even pay your bills on line and even have the statement sent directly to your bank. Once you get the system set up, it will run virtually by itself. (one must remember to get funds into that account on a timely basis.) Thanks so much for sharing.
Ann recently posted..Credit Card Debt Lawsuit – 5 Things You Must Know Before Settlement
Those are good points that you have made there Anne. We have discovered over the past few years that the banks seem incapable of looking after their money so why should we imagine that they will look after ours.
Personal accounting is really needed as it helps much in time of tax filing and keeps us out of debt because we know where we are and which spending can affect us or which will not.
Quick Quid recently posted..Ought to I Use a House loan Broker or Go Immediate to a Financial institution?
Have you ever been in a situation where entries have appeared on your bank checking account statement and you have no idea what you spent the money on. So it is necessary to do personal accounting
http://www.smats.net/Taxation/
First time I am thinking about personal accounting as necessary activity .Earlier I use to satisfy with bank’s calculation but now I will follow you.
Personal accounting is important to keep records of transactions. This allows you to track and control all your expenditures.