I remember a line from an old rap song that sang “I got my mind on on my money and my money on my mind.”
A catchy phrase with a surprising amount of practical, real world value.
Early on in my freedom Journey I remember Robert Kiyosaki writing about how important it is to keep your books.
He said you either do it yourself or you hire someone to do it, but if you want to be wealthy, it must be done.
Books are just records of what’s happening in your financial life.
They give you a clear picture of where you’re at financially.
A few years ago when researching for one of our company’s products, The Financial Literacy Academy, I picked up a great tip from Mark Kohler who is a famous tax accountant, attorney/CPA, and best selling author.
He said you should set aside a small bit of time once a week to do your books.
Ever since then I’ve set aside 30 to 60 minutes each Saturday morning to focus on my “Books”.
It’s been one of the best habits I’ve developed because it keeps “My mind on my money and my money on my mind” in the best way possible.
Here are the major Benefits I’ve discovered from cultivating this habit.
- Each week I know exactly where I’m at financially so I never have to guess where I’m at in relation to my freedom number.
- Each week I review every single expense Item and often, I catch stuff I can eliminate that I wouldn’t have seen had I not been keeping my books. This allows me to be constantly plugging holes in my financial bucket.
- Each week, I’m actively thinking about my money situation which keeps it in my mind, one of the most important things you can do to have financial success. Most people avoid the topic of money and because they have financial problems, they bury their head in the sand and choose not to face it. Definitely not a good strategy if you want your money situation to improve.
- TAX SAVINGS < – Keeping your books allows you track any expense that is a business expense so you can deduct it and save money on taxes. If you are expecting your accountant to find you your deductions at the end of the year you are LOSING MONEY. The best way to ensure you’re getting your deductions is to track your expenses and categorize them through out the year.
- Keeping good books makes tax time a breeze… (more on this in just a bit).
What kind of Book keeping counts as “Books”
Whatever. Works. For. You.
It can be numbers on a spreadsheet.
It can be tracking all your personal expenses imported into a financial software that allows you to categorize everything and see them in reports. I like this program for that.
If you have a business that’s profitable, I recommend Quickbooks online.
It’s only a few bucks a month and does some amazing things like…
- Imports all your banking and credit card data into the program so you can categorize.
- It can learn your habits, categorize common items automatically to save you time.
- Give you the ability to run reports like a Profit and Loss statement, so you can see your financial health over certain periods of time.
- and here’s one of my favorites… -> You can upload images of receipts to store right in the program so if you ever get audited by the IRS and they want to see your proof you can simply give them a guest login to your books versus a big ol box of receipts.
- Also – when it comes to tax time – all of your stuff is so organized you can push a few buttons and get your accountant everything he/she needs to get your taxes done in super fast and easy.
- These last 2 items provide a huge amount of peace of mind.
Is Book Keeping Hard?
If you have a lot of data and your starting late in the year to get organized, it can take a day or 2 of pain to get everything entered in and categorized properly but once your up to speed as long as you dedicated that weekly time – book keeping is a breeze!
Should you do it yourself or hire someone to do it for you?
I recommend doing it yourself and here’s why.
I had a book keeper before and what I found was that I was totally disconnected from my money (one of the main benefits of book keeping) because I just expected them to take care of it.
Additionally, each week they would email me asking me for receipts and help on categorization which was sort of defeating the purpose of having them do it since I had to spend my time with them weekly anyway.
My partner had a book keeper who double entered his income one year and he got charged double the taxes which was a HUGE amount.
The value of taking responsibility to review your financial situation on a weekly basis I think is pretty priceless.
If you can find someone to do it for you, and still stay connected to your money and understand what’s going on – this can work.
And here’s a little known fact of history in support of keeping your own books.
John D Rockefeller, the richest man in the world back in the early 1900’s, was a notorious book keeper. He tracked and packed his books around with him and even when the company was raking it in, he kept the books like a mad man, himself.
I imagine it was because it kept him connected, intimately, to his money and I can’t help but wonder if this was one of the reasons he became so wealthy.
Do you have this wealthy habit?
If so, I’d love to hear your experience below and if not, maybe now’s a good time to start.