How Accounting Will Change Your Life
Accounting is seen as an afterthought. We think of accountants as people who cut our checks and sitting in a back room crunching numbers all day. It is the most underestimated skill you can learn in business, those same skills will translate into other areas of our lives.
Personally, I failed to account in college and getting into the world of business, It was actually my father that actually told me accounting is the most important part of running a business. Now that can be arguable, but I think he meant the skills of accounting. What we learn to do in Accounting, can translate into other parts of a business.
What is Accounting?
Accounting is used to record, analyze, and communicate financial information about a business or other entities. It is important because it tells you the financial health of an entity at any given time.
It shows us what we need to change, and how products are doing. It can show you if a product’s margins are high enough, it can show you if cash flow is healthy, and It is the language that investors, The Government, and other stakeholders all use to communicate about the financial status. It’s Very Important.
How Accounting translates to other fields
It is hard to write this post to communicate what is really important about accounting. Accounting is undeniably important in business, but there is a formula of practices that we can use to better manage our personal finance, our Marketing, even our fitness!
The formula is simple. Record, analyze, and adjust.
These three simple words, can help you lose 20 pounds, create a winning Facebook ad, and even manage your mental wellness. Let me explain.
Record
Whatever endeavor we choose to take on, there will be things we know don’t know. Keeping a record of everything you are doing is paramount. recording all activities gives us a baseline. Whether we are succeeding or failing, recording will give us everything we have done.
Analyze
With that data, we can review and go into detail about everything that went right and wrong in any given project. We can see progress over time or the lack thereof. We are trying to find how we can improve, or even change strategies to reach our goals.
Adjust
Once we have analyzed the data, we can now have a better roadmap on how to adjust. The new direction might fair better, it might not. Regardless we now know. It is really this cycle that will eventually help us find success in whatever we choose to pursue.
How Can this help us?
Marketing
Marketing is surprisingly technical. Data is king, and tracking it tells us the story of how well our products or services are communicated. Tools Like Google Analytics aggregate this data for us. We can see how ads are performing, using the metrics of your choosing. Based on the results marketers can test and adjust to make ad spend more effective.
Not tracking your ads using tools like a Facebook Pixel, is unheard of in successful digital marketing. It gives us the ability, like in accounting the ability to see the roadmap, and what we need to change for more relevant and profitable ads.
Health
I think Health and getting in shape have eluded most of us at one point in our lives. I have talked about industries that promise the secret method to weight loss and other health goals. It seems to never work.
We think we are eating less. We go to the gym, run, and try to chug our lemon water. We stagnate. Get Upset and revert back to our old ways. Most are not tracking. They don’t track their meals, They don’t track their weight. They Don’t track their workouts.
This Hits home for me. I got on a Keto Diet, and I thought I can eat as much as I wanted. I lost weight for a bit, but I was stagnating. I then decided to track what I ate in a day, and I was overeating 1000 calories a day!
I started running. It was great, but one problem. I was not losing weight. Imagine running 8 miles, for months, and not losing any weight. When I looked at the data I noticed. On the days that I ran, I grossly overestimated how much I was burning, and rewarded myself with more food.
I now walk as cardio. It doesn’t make me as hungry, and I can burn extra calories. I was able to reach my health goals by recording my progress. Analyzing what was working and what wasn’t, and coming up with a better method.
Personal Finance
When Learning Financial planning, we notice how similar it is to accounting. The difference? We are doing accounting for ourselves instead of a business. We never seem to have enough money. Always wondering where all the money is going.
Unfortunately, personal finance has the same culprit as nutrition. We tend to underestimate how much we spend! Again most don’t track and when we look to find the problem, we are lost. Recording all expenses is a game-changer. It will have you questioning how much you love that $100 A-5 wagyu steak tartar (sorry I’m hungry).
We can all do better with our personal finances. Save more, invest more, and spend less. It is important for our futures, and to do what we want, whether retire, travel, or start a business, and luckily we have a simple method to help us achieve our goals.
Trust the process
We will try, We Will Fail. What Accounting teaches us is not to find the right answer right away. What is does teach us what is working, and what is not. Where we need to improve, and what we need to focus on.
With so many different ways to achieve what we want, Using this method keeps us on track, but also keeps us open to new avenues to reach our goals. My Dad was right. Accounting is the most important skill to learn, and it can help us a little in every part of our lives.