To manage your money is not that hard that you need to study accounting in unversity. It needs your few minutes time to understand the basic principle of accounting, as I did in the IB diploma. List of basic accounting you have to know to manage your money is:
1. Double entry recording
2. profit and loss account
3. balance sheet
4. cashflow forecast (for those who want to plan future expenses)
Before you can implement all this accounting, you first must acquire something like PDA where you can do the excel for recording your transaction every time you buy or receive money. This day, the PDA that i have is so cheap (2005 PDA, XDAiis) that it costs only 30 GBP in ebay.co.uk.
Thanks to my dad giving me this PDA, even it's heavy but it really helpful. =)
above is the example of the account recorded using the PDA, but read using the PC, transferred by SD card (click the picture to open it)
Now, let's go to the double entry system.
Double entry system
The name itself suggest that we must do 2 recordings at one time means that one account must be debited (increase in number) and the other account is credited (decrease in number).
e.g: Let say I buy telephone which costs 40 pound. means that I have to minus (credit) my cash account and to plus (debit) my asset account.
e.g: Let say I buy food costs 2 pound. means that I have to minus (credit) my cash account and plus (debit) food account.
remember that anything that cost your cash out will credit your cash account, and will debit the other account (like food account, asset account etc)
in other case, if you get something by borrowing money/loan, then you might debit asset and credit the payable account as shown in the case of buying car by loan below:
The use of PDA is really helpful for this process of recording because you can:
1. immediately record your money transaction
2. avoid forgetting any transaction occured
3. easily navigate from one account to another account through the tab inside the pocket excel (PDA)
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