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(R)Evolution In Home & Personal Accounting

(R)Evolution In Home & Personal Accounting


'Accounting for a Better Life’ is a book in which John Passmore proposes a new, simplified and fun approach, to home and personal bookkeeping and accounting.

New methods, based on what he calls domestic social accounting, allow people to take control of their personal and domestic financial activities. The system provides the necessary visibility, so users know exactly how much money they spend and how well they balance their expenses in a relationship ...

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'Accounting for a Better Life' is a book in which John Passmore proposes a new, simplified and fun approach to both home and personal accounting and bookkeeping.

New methods based on what he calls social welfare accounting allow people to take control of their personal and domestic financial activities. The system provides the necessary visibility so that users know exactly how their money is being spent and how well they balance their distribution costs. The balance is in basic domestic needs and responsibilities, spending on vacation, recreation and entertainment, and securing future well-being. With knowledge of current and past release models, users can know where and to what extent changes may be needed. The budget and accompanying feedback will facilitate the oversight of such financial planning.

The author believes that the new methods have the potential to be adopted as a formal subfield of corporate accounting, ultimately perhaps with appropriate certificates and diplomas for those who have learned to use them.

With such recognition, enthusiasm for appropriate investment by industry and the state can be realized, so that domestic accounting, its further calibration, and related training infrastructure can all be further improved and refined. . He suggested that such an approach would later become an integral part of the school curriculum. This gives young people the best basis for accepting and bearing the financial responsibility associated with success in modern life.

In the prevailing situation in the United Kingdom, in a very serious debt crisis, the new approach, almost by the way, provides the necessary insight into the state of the family's financial activities to warn of possible difficulties in taking the necessary defensive measures. so you don't get into debt. For those who have already experienced a debt, the new methods provide the necessary overview of their finances to facilitate the necessary planning and control, which is necessary for optimal debt management.

When people realize the size and value of average domestic cash turnover over a lifetime, it seems incredibly serious, financial management is not yet required. If an equivalent small business with the same turnover is not effectively managed, owners are likely to knock on the doors of shareholders, accountants and the company house.

Accounting is traditionally considered by most people to be an increasingly tedious, boring and boring activity. It is also considered a relatively challenging task, given the length of training required to achieve professional status as a chartered accountant or similar.

Beginning managing his own accounts at home, soon after the arrival of the PC in the late 1980s, John Passmore sought to adapt the traditional, business-oriented way of using accounts with all the usual end-of-life messages. . It uses commonly used universal software, an accounting package (Microsoft Money) and a spreadsheet. It adapts to double-entry bookkeeping and must also ensure that its methods handle large amounts of money while working abroad for 30 years.

Although it was basically a satisfaction, in such a way that it made the total net worth, John realized two things; first, the traditional business focus and stimulation of profit and shareholder value have, of course, little to do with household status, and second; nothing is seen in the nature of most daily household income and expenditure. In addition, the terminology and general style of corporate accounting, he found, may not necessarily be suitable for successful and fast accounting in the home environment.

Over the ten years, John Passmore has gradually evolved into a new approach to personal and home accounting. At a basic level, everything is much easier to understand and apply. This is achieved through a set of simple techniques, such as strict naming conventions and a simplified version of the so-called accounting equation. Above all, he introduced a new focus on household and personal accounting, which he calls the advantage of home. The household benefit, or DWB, essentially provides a hierarchical structure for determining and recording ups and downs, consisting of day-to-day local financial activity.

At a high level, there is a three-way division into basic, discretionary and universal, between.

The basics are divided into Essentials (services, food and beverages, clothing, health, etc.), Responsibilities (taxes, debts, licenses, maintenance, insurance, etc.) and Family (gifts and personal obligations, etc.). Likewise, discretion includes buying and selling assets, Nice to Have (holidays, leisure, entertainment, etc.), Investing in the future (Household improvements, pension contributions and other investments, etc.). Others are subject to uncontrollable changes, such as prices, inheritances, profits and valuations, fines, losses and deductions, and so on.

This DWB structure is used as the basis for the domestic statements and for classifying all transactions as they are in accounting, within accounting.

The subtitle of his book "An Account for a Better Life" is "Gain control of your personal finances." After reviewing control and comparing a number of typical control environments, the book describes how control relates to financial situations. The visibility that DWB now provides means that a new set of financial reports can be accepted. Replaces trading style, trading account, profit and loss account, balance and cash flow statement. The new set of statements, tailor-made for the domestic situation, includes a statement of domestic well-being, a domestic balance sheet and a statement of domestic cash flows.

Readers will usually know the average business indicators such as gross and net profit margins, return on investment and more than twenty other indicators. Although these indicators are important for corporate governance, they are not entirely related to local finances. However, with the visibility of DWB, a new set of domestic financial factors suddenly emerged. John describes five major new causes and many secondary causes. For example, the basic cost of living factor (BCLF) is the ratio of basic domestic declines to total household growth, while the Welfare Contribution Factor (WBCF) is the ratio of discretionary domestic declines compared to total household growth. These factors provide criteria against which different characteristics of domestic life can be qualified and quantified.

These factors open up new areas for comparing, measuring and controlling the domestic, financial situation based on family size. However, their real advantage is waiting for calibration and data collection to be able to draw parallels with business concepts compared to industry averages such as standards. Over time, domestic averages need to be determined. In the future, BCLF 3 0.43 for a three-sample household could be compared to a factor value that would be found in other families with three, regionally or internationally, across continents.

Although it has this option later, other forms of financial control are suddenly available almost immediately. For start-ups, with new visibility, it is now possible to offset or allocate expenses to the Basic and Discretionary categories, for example with an emphasis on Always Investing in the Future (IFF). John Passmore provides the necessary background and information for anyone who can start setting up and running their own home accounting system. Given the simplicity and insight provided, which gives importance to the financial activities of each home environment, with its own character and content, the author believes that he has created a system that can be fun to use. Once you are familiar with the settings, a few hours a month are enough for the accounting to start; and a few half days at the end of each financial year to prepare annual reports should be all that is needed at that time.

With basic computer science, the best access to a computer, online connectivity and math skills not beyond the GCSE, John thinks the benefits can be claimed in a home country with the same annual income, almost £ 20,000 or more. . It is also suitable for accountants in their work for domestic clients. A sense of personal responsibility for members in the local situation is paramount.

The advantage is that by collecting the numbers in a few months, the fulfillment of the real distribution and balance of family expenses is obvious. This makes it possible to decide on any necessary changes in the structure of financial activities in order to achieve a better balance. The overall goal is to achieve a holistic and improved sense of well-being at home.

With the newly discovered information, family members will know in detail what needs to be done to achieve a better lifestyle. Accounting alone cannot achieve this. Discipline is needed to change spending patterns

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