Managing finances can be a daunting task for many people. However, with the right mindset and approach, anyone can learn to manage their finances like an accountant. We spoke to a few financial experts to get their tips on how to think like an accountant and manage finances efficiently.
1. Keep track of your expenses
One of the fundamental tenets of financial management is to keep track of your expenses. Accountants keep a detailed record of all transactions, and likewise, it’s essential to track your expenses.
“Track every penny you spend,” says Jody D’Agostini, CPA, CFP, and author of Let’s Talk Money: You’ve Got Questions. We’ve Got Answers. “You can’t know where your money is going if you don’t track it. Make it a habit to categorize expenses and use an app or a tool to help you stay on top of your spending.”
2. Budget, budget, budget
Budgeting is the cornerstone of financial management. Without a budget, it’s easy to overspend and lose track of your finances. “Live within your means and budget your money,” says Chris Chen, a financial planner at Insight Financial Strategists. “Creating a budget helps people control expenses and gives them a framework to systematically grow their wealth.”
To make budgeting more comfortable, you can use apps and tools for tracking expenses and budgeting.
3. Be proactive, not reactive
Proactive financial management can save you from financial disasters. Accountants plan ahead and take necessary steps to avoid financial errors, and you should do the same.
“It’s essential to think ahead and plan for the future,” says Kristin McFarland, a financial advisor and CEO of Darrow Wealth Management. “Don’t wait until your finances start to fall apart to take action.”
4. Consider your goals
Thinking like an accountant means not only managing current finances but also planning for the future. To do this, it’s crucial to have specific financial goals.
“Think about what you want to achieve financially and set goals to make it happen,” says Carolyn McClanahan, M.D., CFP, and director of financial planning at Life Planning Partners. “Having a vision and financial goals will help with everyday financial decisions and give you the motivation to stay on track.”
5. Know your numbers
Accountants are experts with numbers, and the same applies to financial management. It’s critical to know your numbers and keep track of your net worth.
“Know your net worth, which is all your assets minus your liabilities,” says Chen. “This simple calculation gives you a complete picture of your financial health.”
Final thoughts
Thinking like an accountant means taking a proactive approach to managing finances. It’s about keeping track of expenses, budgeting, setting goals, and planning for the future. By adopting these habits, you can manage your finances like a pro and achieve your financial goals.