Do You Need an Accountant?

November 12th, 2008 — Diversification, Financial Security, Income Streams, Investing, Money, Personal Finance, accountant 

accountingThe average person usually tries to struggle with their finances year after year and only visits an accountant a few days before their taxes are due. By this point, it’s up to the accountant to try to piece everything together and they won’t be able to offer much help when it comes to managing your money. The fact is, most of us could use the help of an accountant or a financial planner. The question is – do you NEED one?

Let’s take a look at a few scenarios that answer this question. Accountants and financial planners definitely serve a purpose but they may not be necessary if you already have a good grasp of solid financial techniques. But, before we go any further, let’s get to the scenarios.

Scenario #1 –

You’re just starting out on your own. By this point in your life, you’ve got a new job, a boat load of student loans and your whole life is years away, right? Wrong! If you don’t have a basic grasp of good financial practices, this is the worst time of your life to sit idly by. An accountant or a financial planner is incredibly helpful during this stage in your life and can start you on the path towards financial independence. If you have trouble balancing a checkbook let alone planning for the future, there really is no question – you need an accountant.

Scenario #2 –

You want to get into investing, but you’re really not sure how to get started. Many people make the mistake of hooking up with a broker that may not have their best interests in mind. You would be better served by visiting a financial planner or an accountant that specializes in handling investments to get an idea of where you need to start and where you want to end up in a few years. By taking the right step at this juncture in your life you can save yourself a lot of heartache and financial woes.

Scenario #3 –

You already have multiple streams of income coming in and you’re pretty much a whiz at finances. In this case, you may not need an accountant, since you’re already capable of handling most things. However, you may want to seek out a financial planner to determine whether or not you’re missing out on some opportunities that could increase your wealth further. If you have not yet diversified, this is a very important step to take. We still recommend using a certified accountant for tax preparation, even if you are a whiz at finances, simply because they have more experience in handling the complex US tax code.

Scenario #4 –

Finance???? I’m lucky to have money by the end of the month! If you’re just getting by, you may not be able to afford an accountant just yet, but you definitely need some help. Your best bet is to visit your local library and start reading everything you can about the art of managing your money. This will help you start out on the right path until you can afford to get an accountant to help you.

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Checkbooks 101

September 24th, 2008 — Banking, Personal Finance, checking 

Although the premise of balancing a checkbook sounds easy enough, the fact is that the vast majority of Americans really don’t take the time to do it, or they do not know how to do it properly. There is a lot more than simple addition and subtraction when it comes to balancing a checkbook and if you are not careful, you can end up bouncing checks. Here are some tips that everyone needs to know about balancing their checkbooks.

1. Balance means balance –

Those statements that you get every month from the bank are not just for show. They are there to help you balance your checkbook and make sure that there are no errors. The next statement that you get, go line by line and reconcile this with your checkbook. We’ll go more into reconciliation here in a minute, but for now, let’s focus on the balance. The balance in your checkbook needs to match the balance on the bank’s statement.

If it doesn’t, you need to see where the error occurred. Many times, it may be do to a checking account fee that you forgot to deduct, or a simple subtraction or addition error. Look through the entire statement until you find where the error occurred and then make sure to note the correct balance in your checkbook.

2. Reconciliation –

We mentioned this briefly above. Reconciliation refers to the process of making sure that the entries you made in your checkbook register match the entries on the bank statement. It does take a little time, but it is well worth it. Make a checkmark next to each entry as soon as you have verified it in your register. Keep track of any wrong amounts and watch out for fees that you may have forgotten to deduct.

If you have a debit card from your bank, there may be extra fees that will apply each time you use it. If you are not marking down these fees, it is all too easy to end up short in your checkbook. Make note of all of these fees and in the future, write them down in your checkbook whenever you use your debit card.

3. Handling errors –

Sometimes banks do make mistakes, but if you are not balancing your checkbook every month, you may not notice them. You may not also notice an error you’ve made until it is too late. Balancing your checkbook gives you the opportunity to find these errors and correct them before they end up costing you more money in bounced check fees.

You can look at the process of balancing your checkbook like balancing a cash register. Most businesses need to make sure that the receipts match the balance left in the register every day. Your checkbook is just like that, and being more than a few cents off is not a good idea. Schedule in a day every month to go through the process of balancing your checkbook, it will pay off.

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