In addition to providing a solid foundation for a business career, an online accounting degree also benefits you in the area of personal financial management. Consider managing your personal finances similarly to the way a company manages its own assets and liabilities. You will gain a true picture of your total financial position, find ways to improve your bottom line, set financial goals and achieve them.
Budgeting is an annual process for companies and one may benefit individuals tracking their personal finances, as well. By sitting down and looking at your expected inflows (salary) and outflows (expenses), you can plan which large expenditures, such as a home purchase or vacation, will fit into your personal budget each year. Online accounting degree programs familiarize students with an important financial report called an income statement. Using the income statement format, you can structure a budget of expected income and expenses to determine how much of your salary you will be able to save versus spend in the upcoming year.
Managing Your Checkbook
Students in an online accounting degree program learn to reconcile accounts and identify accounting errors for a company. This knowledge may also be used in personal finance when reconciling checkbooks, bank statements and personal investments. Tech-savvy individuals may also opt for online personal financial management using accounting software, such as Quicken
. Although setting up your personal financial tracking in a computer program requires initial time investment, budgeting and tax preparation will be streamlined, and the software helps avoid basic computational errors.
Your Personal Net Worth Calculation
Did you know that the basic accounting equation is also used to calculate an individual's net worth? When learning about the classification assets and liabilities in business, also try to think of these principles in personal terms. Assets are everything that you own: equity in your home, a vehicle, clothes, jewelry and personal effects. Liabilities account for what you owe: a mortgage, credit card debit and other loans. The difference between personal assets and liabilities equals net worth.
Understanding your net worth assists you when completing financial applications for new business loans or mortgages. Often, when bidding on a house, a seller will ask you to complete a personal financial statement to help prove your strength as a buyer. To avoid showing low or even negative net worth, take the time to examine your personal finances and pay off debt as needed before entering any new financial ventures.
If you are interested in improving your personal financial management, online accounting classes will teach you how to analyze your financial position and calculate your new worth. Accounting knowledge also improves individuals' understanding of the tax preparation and reporting process, as well as developing their overall business acumen.
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