WHY NOT USE SOFTWARE?
I know we have not mentioned all the really handy accounting programs out there that can help you with asset management. This is because you don’t usually carry your computer around with you, while a check book register or a small notebook are portable, so you can note down your expenditures any time, anywhere.
As the old saying goes, the dullest pencil is better than the sharpest memory. We would also advise you to make note of what you do with that cash you take out of the ATM. All too often, it can vanish into thin air without you even noticing. You can write the amount you spend right on the slip of paper, and note down what it was for.
Was it an essential, like milk, or was it a luxury like beer? Again, part of asset management is sticking to your budget and trying to cut down on your impulse spending, so writing these things down will help you spot your areas of impulsiveness.
A notebook for all finances is an even better idea than the checkbook register because you can also note down any items you might be putting on your credit card/s.
THE GOALS OF ASSET MANAGEMENT
The whole goal of asset management is to make the most of the money you do have. Credit cards, with their fees and interest and other potential penalties, are not the best way to make the most of your money.
Accounting comes in a couple of different forms, including, accrual accounting and cash bases accounting. Accrual accounting will help you keep track of what you owe if you’ve exceeded your income. This should then let you know that you are spending entirely too much money and that you had better begin cutting back here and there where possible, in order to manage your assets more efficiently.
It is a rare person these days who doesn’t have some form of debt, and a credit card CAN be a good thing if you are making your payments on time and more than the minimum on a regular basis. This is how you can boost your credit score. It is also a way to decrease it though, if you are not careful!
It is not always intentional either,”we are all also very busy. And yes, mistakes do happen. Your checkbook register may have a different amount written in it, compared to the amount of money that you have spent.
That’s why we recommend duplicate checks, and pressing down hard when you fill them out. All too often we write a check and can’t recall who it was to, what for, and what amount.
Keeping these kind of detailed records and making a habit of keeping all your little bank slips and receipts will also be handy at tax time. Especially if you start thinking about running your own small home based business, you will need to keep track of everything you spend, supplies, corporate hospitality (which you can deduct at 50%), and so on.
In another article we will talk about the risks as well as rewards of tying your personal finances to your own business, but for now, the main thing to remember is that effective asset management is all about keeping track, and staying within budget and on target for your short term and long term financial goals.
The Basics Of Asset Management Part III
