Personal finance. Alternative view.

Personal Finance

Many people have now become interested in personal finance management. I propose to get acquainted with an alternative option for building a financial system. 
Many books and manuals are devoted to the topic of personal finance, but they are all surprisingly similar to each other in content. Therefore, I think it will not be superfluous for people interested in building a personal financial system to get acquainted with an alternative view on this topic. Perhaps they may seem controversial to some, but this is a personal point of view – and nothing more.  

The article highlights the main points that are important when planning personal finances.

Expense accounting is the fate  of financially insolvent people

It takes a lot of time to account for expenses, which is better to direct in a completely different direction, namely, to receive additional income.  But all the authors in their books insist on starting the management of personal finances by keeping records of all their expenses, offering all sorts of special programs, mobile applications and web services. It is argued that such an approach to personal finance will help to understand your expenses, if necessary, optimize them and, due to this, find an additional source for further investment. But if you look at it from an alternative point of view, then cost accounting is needed in order to understand in a difficult financial situation what expenses can be optimized or eliminated, as well as just like that, accounting for the sake of the accounting process, without a goal. In general, it is a tool for  insolvent people. If you managed to earn a million dollars without taking into account expenses, then why start doing them? Wouldn’t it be better to use the time spent on constantly keeping records of small expenses to increase your income? If we consider that such accounting requires at least about half an hour daily, then more than 7 days will be obtained in a year. Impressive, isn’t it.

An alternative view of personal finance in no way precludes keeping track of expenses. You just need to approach it without fanaticism. For example, for an employee, the structure of  income and expenses from month to month is relatively stable, so it is quite enough for them to keep track of their expenses every six months. This is quite enough to know your current financial situation.

If you are in control of your finances, you can calculate your capabilities. This will allow you to properly allocate funds and find a way to invest.


It should always be remembered: regardless of the amount of earnings, if you spend all your income, then no accounting will help you establish personal finances. The way out of this situation is either in self-discipline or in increasing income.

Balance sheet accounting

Sources of income are much less than expenses. It’s also easier to control them. And if you build your personal financial system on the basis of income, then there is no need to keep track of expenses at all. It’s easy to do. For example, you keep your money in a bank, at home and in an investment fund. Accordingly, all your income goes to each of these places. In order to know your financial condition, you just need to keep balance sheets for each place and make sure that the final column grows faster than inflation every month. This accounting option is simple and does not take much time. The effect of balance sheet accounting is the same as that of expense accounting.

The use of budgeting  in the management of personal finances

The expression “master the budget” is well known to those who work in large organizations. Budgeting can just as well be applied to personal finance planning. Its essence is as follows: your earnings are $ 1500, of which you decided to save $ 500 every month and keep it at home as a “stash”, the remaining $ 1000 will go to your expenses – this is the monthly budget. Its essence is to meet the amount allocated for expenses. In order not to start spending the deferred money, you will need a certain endurance and self-discipline.

Don’t succumb to investment pressure

All books and articles assure that the best way to achieve financial freedom is  to invest. This is true, but only on condition that you invest in a reliable trusted company and are really aware of the risks associated with investing. In addition, you will need special knowledge and time. So this issue must be approached very carefully and prudently. In the meantime, if you have not found a good investment, save money on a bank deposit. This is a very good option for additional income.

Working with personal finances should be fun

It is clear that the ruble is made up of pennies and so on …   But do not shake over every penny, constantly intensively calculating income and expenses, or in the hope of getting an extra percentage of profits to do what you do not like. You need to enjoy working with personal finances, otherwise your life companions will be constant stress, bad mood and nervous breakdowns. 

Perhaps such an alternative view may seem controversial to someone  , but it did not appear from scratch, but on personal experience of accounting and planning personal finances.

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