If you are successful in your career, chances are you will earn more and more income through the years. And if you are also diligent in tracking your financial well-being, then it is likely you will begin to accumulate wealth in some fashion or another. Indeed, one of the typical goals of both furthering one’s career and tracking one’s finances properly is to do just that – accumulate wealth.
If you do accumulate wealth through your own efforts or acquire it in some other legal manner, your financial tracking job just got far more complicated, at least if you desire to keep and grow that wealth. You now have two new jobs that you didn’t have before. The first job is deciding just where to put that wealth and the second is tracking and evaluating its performance once you do place it.
To many people this process may seem very easy, but I am here to tell you that it is often much more difficult than accumulating the wealth in the first place. Continue reading
Budget – an estimate of income and expenditure for a set period of time
I can see the eyes glazing over right now. There are few things in life that are considered as mind-numbingly boring as a budget. Yet a budget is perhaps the most quintessential thing we accountants do, and, indeed, if it is done well, it is one of the most inspiring and human activities one can ever engage in. As usual, many of you are now thinking I have lost my mind, but let me state my case. You might agree with me when I’m done.
It is our ability to think that gives us, the human race, our basic tool to survive and thrive. Unlike lions and tigers and bears, who instinctively hunt or forage for their food and have the physical equipment to allow them to do so, we humans have neither the physical equipment nor the instincts to survive in the same way. We only have our minds, but it is our minds that have allowed us to dominate the planet – to go from cave-dwelling ‘animals’ to space-exploring, DNA-cloning, sky-scraper builders in 10,000 years time. Continue reading
For many years my income and therefore my income taxes has varied significantly from year to year, and for many years I would pay in way too much in taxes one year only to follow it up the next year by having to write a big check on April 15th. In 1999 I finally tired of this routine and decided to do something about it.
In looking at my income tax returns, it dawned on me that all of the forms and verbiage notwithstanding, our income taxes are really nothing more than a mathematical equation. It can be a very complicated equation with lots and lots and lots of options associated with it, but in the end it was still just an equation. And because it was an equation, that meant I should be able to put together an Excel spreadsheet that could calculate my taxes for me.
So I set about creating this spreadsheet, and I discovered that my income taxes were not too terribly complicated. Continue reading
Quicken is more than just a means to get you financial statements. If used properly, it can give you information that will assist you in keeping track of all of your financial and many of your life goals as well. Assuming you need money to accomplish many of your life goals (and that you don’t have an unlimited amount of it), Quicken can help you keep track of your spending specifically along the lines you set up. If you are interested in fixing up old cars, but couldn’t give a rip about traveling to foreign lands, you can tailor your financial reporting to precisely match what you value most in life through the disciplined setting up and use of ‘Categories’. Then you can compare your actual spending to a budget you created to help you maximize those values.
Because Quicken lets you set up recurring payments (and incomes) you can make sure you keep track of everything you have obligated yourself to pay for, but more importantly you can plug in actual or estimates of these payments and incomes for a month or 2 months in advance. With virtually all of your income and spending already posted into your cash account ahead of time, you can easily see how your money is holding out, or accumulating, for as many months into the future as you would like. I have always done two months personally.
Accuracy is important and the reconciliation ability in Quicken lets you make sure you always have the right transaction amounts and balances in all of your cash, credit card and investment accounts.
Quicken can give you a meaningful income statement and balance sheet, but it can also give you reports on spending, income and capital gains that are extremely useful when it comes time to prepare your income taxes for the year. If you are using it properly, preparing to either do your taxes or give your information to a tax preparer becomes about a 10 minute exercise instead of an all day affair. Continue reading
To show you just how much I ‘love’ Quicken, you should know that about 6 years ago I was so fed up with it that I went out and bought ‘Microsoft Money,’ and started using it. That turned out to be an unmitigated disaster, so I was back to using Quicken within a month. I have looked for a program to replace it but have never found one that can do all of the things Quicken can. It truly is a remarkable program that has helped millions of people since it hit the market in the mid-1980’s.
I first started using Quicken in the late 80’s, and it has been the foundation of my personal finances and a major asset to my professional career ever since. Its major selling point is how it simulates listing ‘checks into a checkbook’ for virtually any kind of financial transaction. The program takes all of the debit and credit stuff of real accounting and puts it in the background so you can get a Balance Sheet/Net Worth Statement and an Income Statement/Profit & Loss Statement without having to KNOW accounting. And Quicken is the one inexpensive program I have found that does a reasonably good job of tracking investments such as stocks and bonds.
All of this is terrific stuff and was a major boon to those of us who wanted to keep track of our finances. To give you an understanding of just how wonderful this program was and still is, you should know that my father (who was also an accountant) used to keep track of our family finances on many large green bar columnar sheets that he would pore over for hours with his adding machine cranking continuously. Quicken eliminated all of that. Continue reading
In a previous post, I discussed the need for every person to engage in accounting to keep track of their own personal wealth. In an attempt to concretize this idea I plan to go through how I developed the program I use today which has helped me, my family, and my wife’s family immensely through the years. Indeed much of the reason why I now have the freedom and the time to spend in developing Shurts Accounting and Shurts Tennis can be attributed to all of the information I gleaned about our family’s finances through this program. And I have employed it in one fashion or another for my mother and my mother in-law through the last 20 years to help them live comfortably after their husbands died.
Far from being a constricting straight jacket that doesn’t allow you to enjoy the money you have, a good financial accounting program liberates you by giving you the peace of mind that you are doing well and the early warning system to tell you when danger is on the horizon. With the information you generate from such a program you can see weeks, months and even years in advance when a financial problem might be coming, or you can be re-assured that your wealth is growing and you are going to be able to do all of the things you want to do in life.
There are three major components to my program, but also a number of sub-divisions to these major components that I plan to write posts on. Continue reading
In the last part of this series I showed the devastating results the moral code of altruism and its political expression of ‘the strong must be sacrificed to the weak’ have had on human progress and human prosperity throughout history. In this post, I am going to show exactly what the implementation of this philosophy does to each human being who subscribes to it or is forced to live under it.
According to altruism, the ‘good’ is represented by the strong sacrificing to the weak. If this is true, then the actions taken while following this code, either voluntarily or involuntarily, should ultimately be beneficial to the individual human beings involved. Let’s see if this is true. Continue reading