Applying Accounting Principles to Your Personal Finances

If you’re a bookkeeper or an accountant, you’re probably skilled at keeping the ledgers balanced on the job, but how are you doing in your home life? Being great at something at work doesn’t always transfer at home. In fact, if you’re a financial professional or accountant, it can be harder to admit that your own financial picture is not as organized as some might imagine it to be. The good news is that you can apply those accounting smarts to your own life.

The Double Entry Principle for Budgeting

Budgeting can be tough for everyone. One way to conceptualize your budget is with a very simplified version of the double-entry principle. Essentially, you need to always think in terms of balancing your expenditures with your income. Thinking of this as an accounting problem instead of not being able to stop spending too much money problem can help depersonalize it, remove any negative emotions you have around it, and look at it more objectively.

Tracking Everything

This is another important aspect of budgeting. No successful business runs without tracking where every dime is going, as well as tracking income, and you should do this too. Adopt whatever method works for you, whether that’s writing everything down, putting it all in a spreadsheet, or letting an app do the work for you. When you’re not tracking your spending, it can be easy to handwave where the cash is going, and it’s often a surprise once you take a good look at it.

Making Interest Rates Work for You

Are you applying what you know about interest rates to the interest rates in your own life? If you’re whipping out your credit card too often and not paying it off right away, the answer might be no. You should also take a look at any debts and how you are doing on paying them off. For example, if you have multiple student loans, meeting the different payment deadlines under different terms could be a hassle, and it could be costly as well. You might want to use a student loan consolidation calculator to find out what you can expect to pay during repayment if you combine your outstanding balances. This could lower your monthly expenses, and if you are struggling with credit card debt, you could use what you are saving each month and put it toward that balance.

Making Smart Investments

If you already work with numbers, you’re in a good position to get into investing and make savvy choices about how to grow your money. If retirement is years away and you have the money to spare, don’t let the prudent nature you may share with your profession push you to make only the most conservative investment choices. It’s smart to park your money somewhere safe and watch it grow, but if the choices you make are too safe, you might not keep up with inflation. Choose a moderate mix of diverse investments for your portfolio, making sure that you always keep your retirement safe, and put your money to work for you.

Managing Debt

It does not matter if money is your profession, you are not exempt from the pitfalls of debt. However, this is completely under your control. Debt management is essential for overall financial health, and as a money master, you already know this, but are you putting it into practice? There are multiple strategies out there that pertain to managing debt. Some include the snowball method, taking out a loan for the purpose of debt consolidation, or simply not accruing any (i.e., no credit cards buy your vehicles outright, rent vs. own, etc.) but this is not terribly realistic for many people’s lifestyles. 

It is also important to understand that not all debt is bad. Your mortgage, for example, is a type of debt that can help build your credit and is not considered a negative mark on your portfolio. Whereas multiple outstanding, maxed out credit cards, would be considered bad debt. The key here is to acknowledge which types of debt are essential and which are not. It is likely you could have gone without the purchase that maxed your card out. 


Knowing what you will need money for in 5, 10, 25 years is absolutely a determining factor in how you spend, save, and manage your money today, or at least it should be. Planning for retirement is an obvious long-term goal, but there are other things you may want a large sum of money for down the road that will require active attention and planning now. If you have children and hope to have money set aside for college, you should start thinking about this as early as when they are first born. Saving a little at a time, in a place that yields high interest and has agreeable tax/withdraw terms, is going to be a lot easier to tackle than waiting until they are older, and simply hoping that you will have money to pull from your general savings to help them out. 

Going Without

Teaching yourself the value in determining a need versus a want, and the power of resisting impulse can help you stay on top of your personal finances. Treating yourself on occasion is a natural part of life, and you do deserve to spend your money in other areas than just your bills, however, making this the exception and not the rule is a secret of the pros. Even in your daily life, you can practice this in incredibly simple ways. Heading to the grocery store without a list can result in impulse purchases as well as double-buying, both behaviors are going to slowly drain your expendable income. Getting into the habit of shopping with a list and not making purchases that are not on it is a good way to form positive spending habits that are transferrable to other areas of your life. 

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