There is a lot of talk and writing about personal finance accounting. There are thousands of apps for this in the App Store and Google Play. All consultants, experts, bloggers and just financial preachers put the accounting of personal money at the forefront, clearly saying that without it there can be no question of creating capital.
But is it really so?
Not really. Most of the successful entrepreneurs and investors I know have never kept personal finance records. At least in the form in which it is usually recommended: write down all expenses so that at the end of a certain period you will find out where all the money is going and what you can save on.
If you cannot understand before buying something whether you really need this thing now and whether your current budget allows you to purchase it, then you have a problem. It is unlikely that in this case a fashionable application on a smartphone will help you.
Most people have some kind of obligatory expense that, if left unpaid, could be fraught with your personal capital in the future, such as rent or a mortgage, and there are not many of them. Obligatory expenses can also include the purchase of assets in the form of stocks and bonds, according to your investment plan.
Of course, this is assuming that you already have a financial cushion. If not, then we temporarily forget about investments in the stock market and redirect these funds to a separate bank account until an amount equal to two or three of your monthly salaries accumulates there.
It is unlikely that a person familiar with basic mathematics will not be able to instantly estimate how much free money he will have left for food and household expenses.
Do I need to spend time on accounting for this?
Time is the most valuable human resource, and it can be spent more productively. Even automated cost accounting usually helps few people to reduce spending. Many things people do because they were told to. Installing personal money tracking apps is no exception. It’s just business.
Saving must be enabled in the mind as the default mode. Do not develop dependence on applications. If freeing up free money to invest in a business or stocks is really your goal, then you will do it anyway. Otherwise, you will continue to live beyond your means, buying fancy products, expensive cars on credit, and leaving half your salary at a restaurant, regardless of the presence of personal accounting in your smartphone.
In fairness, it must be said that for some, temporary accounting may be useful in order to present a picture of expenses as a whole. But this can be done on a piece of paper in about five minutes.
Of course, here we discussed only the personal budget, and this issue does not concern the mandatory accounting of the movement of funds in entrepreneurial activity.