The first way to do when we’re struggling to learn Personal Finance is to consider what Personal Finance is NO.
Many people believe accounting and personal finance are the same, but accounting is NOT personal finance. Personal Finance: Make Sure Your Property’s Assessed Value is Correct offers excellent info on this.
They can sound the same on the surface; they both have to do with capital. The meanings should also allow one to grasp the distinctions better.
Merriam-Webster’s accounting concept is “the method for tracking and summarizing commercial and financial activities and evaluating, checking and documenting outcomes.” Based on this description, we see that accounting is the process of examining and tracking what you have accomplished for your assets.
That is why typically hiring an accountant isn’t enough when it comes to your personal finances.
Accountants typically don’t worry for personal finance (there are few variations to this rule). If your accountant is either a financial planner or mentor, by the end of the year he or she would usually simply look at what you’ve accomplished for your finances and send you a rundown on their study.
Typically this declaration is a tax return; what the government owes you, or what the government owes.
Quite seldom does the accountant make a statement deserving of a Balance Sheet or Income Statement or a Net; all very valuable instruments that are required to handle the personal finances effectively.
Personal Finance tends at the investments from a more constructive and objective-oriented viewpoint. That is what offers something for the accountants to log, check and evaluate.
The concept of “Finance” in the Merriam-Webster (Concise Encyclopedia) is the “method of collecting funds or money for some form of spending. Customers, company companies, and governments frequently do not have the funds they need to make transactions or perform their activities, while savers and creditors have funds that might receive interest or dividends if placed to effective use.