Accounting System and Money Management Systems

Your accounting system is not your money management system. Those 2 things walk hand in hand - but they are not the same thing.

So, let’s explore the differences, and why you really need both.

Your accounting system is what you use to track your income and expenses, your liabilities, and your assets. Think about it as The Beginner Bookkeeping Kit or your Quickbooks account.

You need an accounting system because: what you don’t measure, you cannot improve. With your accounting system, you can see:

• The trends of your income

  • Measure what is working, what is not working, and what can be improved

• Trends of your expenses

  • Are they investments?

• Get organized for tax season

• Start developing an intimate relationship with your money.

Your accounting system will be the foundation for any money management system you chose to implement. 

It’s very hard, if not impossible, to implement a money management system without an accounting system. The first step is to find an accounting system that works for you.

And for this, here are my recommendations:

1. Connect your accounting system with your personal style

   1. If you love notebooks, journals, pens, washi tape…. Well, starting with a physical accounting ledger might work for you. You’ll be able to use all those things you love to start understanding your money

   2. If you are more visual: the beginner bookkeeping kit would be perfect for you: it’s worksheets with everything you need to simply plug in your data and see beautiful graphics that tell you a story.

   3. If you are tech savvy: hiring someone to set up and train you in using an automated accounting software, like Quickbooks Online, is ideal

2. Hire support when the time is right

   1. One of the biggest mistakes I’ve seen is people hiring a bookkeeper without knowing the mechanics of their money. And this is simple: they don’t understand the data and are unable to make educated decisions. Everything becomes fear-based decisions.

   2. When is the right time? When you understand the flows of your money and doing your books is taking too much time [over 30-min per week]

   3. When hiring, find someone that has experience in your industry: this is crucial. Hiring a friend just because it’s your friend will tarnish the relationship. Hiring someone because you vibe with them might be a mistake ‘cuz they don’t have the experience in supporting YOU with tax deductions and making sure everything is allocated correctly.

3. Understand that “being good with money” is a skill that everyone, including you, can develop

   1. No one came out of the womb knowing how to deal with their finances. This is a skill that you can, and should, develop

   2. I know from my personal experience: who would think that a non-linear dyslexic girl would make a career in the money industry?

Now, let’s get into the money management aspect. Money management is managing your money. As everything in life, the first question to ask is "what is the purpose?”

What is the purpose of managing your money? The answer will change over time. Being clear with this is paramount to making your money work for you.

There are so many ways you can manage your money, and I’m biased to the Profit First methodology [more on this later]. 

When you are clear on the purpose, you can be intentional. Intentionality on how you’re spending your money. Intentionality on how you’re making money. Intentionality on your efforts to get where you want to go.

If you’ve been in my aura for some time, you know that I’m not a fan of budgeting. I believe a budget is restrictive. Budgets focus a lot on what you cannot do, instead of what you can do. To me, budgeting is like a diet: works for a short period of time, and then I’ll just binge eat all of the things that I am “not supposed to”.

This is where Profit First comes in. Profit First is a money management system that works with your human behavior. And it’s a great tool to support you in reaching all your financial goals with ease.

Let’s explore:

Profit First foundation is the Parkinson’s Law, which tells us that we’ll make the most of the resources we have available. So… if we have fewer resources available, we’ll be able to make the most of it.

How does this translate into money management?

By having separate bank accounts that serve individual purposes. You can easily see the resources you have available for each “bucket” of your business. This is the first step of managing your money: telling it where it needs to go.

There are a few ways I can support you with this form of money management:

1. Read the book. Plain and simple. I recommend the physical book so you can highlight and bookmark it.

2. Work 1:1 with me on the Bespoke Experience: this is where I’ll support you in implementing a money management system that works for you and your business.