Audit your own wallet - master personal financial management

As an auditor, I’ve noticed a misconception floating around professionals in commerce: We have ‘trouble’ managing our own money.

‘Excelling at reconciling your clients' accounts doesn’t equate to having your own affairs in order.’

But there is also an expectation: we pros look at personal finances with a cold, logical eye. So obviously, we could never be broke or have cash flow concerns.

Not exactly.

When it comes to my money, it’s no longer about a service for a client. Our finances involve feelings, routines, and lifestyle choices. It’s tough to stick to logic.

Do not worry, my fellow money pro; you can use the concepts you’ve learned from auditing to change your money habits.

Did you know creating a solid budget and achieving your long-term goals is possible? I am sure you remember how auditing is about assessing, verifying, and improving financial processes – a skill which will help with personal finances just as much as with your clients.

Are you wondering, finance professionals and inquisitive individuals: Where do I begin?

Setting goals

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An audit begins with the following principle: identifying a company’s goals. When it comes to personal money, you must decide on your financial goals for each part of your life.

Here are some ideas to get you started:

• Starting an emergency fund - An emergency fund reduces the impact of unforeseen expenses. By setting aside funds systematically, you create a buffer that allows you to meet obligations and provide a financial safety net during unexpected situations.
• Clear your debt - Paying what you owe to various institutions or individuals eliminates unnecessary interest costs and improves your overall financial health.
• Saving up for something big, like an apartment - Just like auditors plan to stay on top of future expenses, saving up bit by bit for a big purchase helps you avoid taking on expensive loans.
• Plan your retirement - You’re building a safety net by saving consistently now. You can enjoy life after your career without the financial stress. It’s an effective way to stay in control of your future.

Remember to list these goals as short-term and long-term objectives to create a guide for your budgeting approach.

Budget controls

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Audits stress internal checks to stop financial mishandling. With that in mind, cap your spending in your budget and set up automatic money transfers to savings. For example:

Assign specific income percentages to groups like:

• 50% - must-haves (groceries, home etc.)
• 30% - other costs- desires (clothing, tech gadgets etc.)
• 20% - savings and debt repayment (student loans, personal savings goal)

• Set up automatic transfers to savings accounts to ensure steady contributions.
• Set up warnings or limits on credit cards to avoid overspending.
• Keep tabs on your income and expenses each month by noting every cost (even small ones)
• Group your spending into two categories: necessary and optional items to spot trends or problem areas, like spending too much on dining out or fun activities.
• Check your actual spending against your planned amounts.
• Review progress toward money goals.
• Do not forget to tweak your budget when your income, expenses, or priorities change.

Professional Advice

Like companies/institutions seeking auditors for expert input, you might find consulting with a financial advisor helpful.

They can give you tips on:

• Making your investment portfolio better
• Ways to plan for taxes.
• How to pay off debt

Using audit concepts for your finances instils order and self-control to manage your finances. By setting clear money goals, limiting your spending, and getting expert help, you can create a budget that supports how you live now and sets you up to do well in the future.

There’s no better time than today. Discover Accensis chartered accountants and registered auditors.

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