Yesterday
was 1st of August. The day for turning the pages of calendars and
the morning devoted to writing up household accounts. All cash expenses
incurred in the last month have been religiously entered in a notebook. Bank
transactions, card payments are noted by me separately in my diary.
The first
step is to find out the cash on hand as per the notebook and the balance
actually on hand – kept in an old black purse, a pouch and a red plastic box
for coins. Cash on hand is short by Rs. 748.
I report the
matter to my mother, Amma.
“Ah, I paid
Rs. 750 to the gardener on 30.7. That explains the difference.”
“Why did you
not enter the amount in the notebook?”
“The
gardener was paid on 6.7. After that he has come only twice. He is to be paid
only in the next fortnight.”
“Then why
did you pay him?”
“I don’t
know. He asked for it and I paid him and then realized my mistake.”
“But the
point is that cash outgo has taken place. So you should have recorded it.”
“I suppose
so.”
I alter my
calculations and sure enough, there is a difference of only Rs.8. I am not
Gandhiji and so I am not going to investigate this difference. However, I am
overjoyed. This is the first time the book figure and the actual are so close. Usually
there are wide differences and they are mainly due to Amma who has stashed
money at different places in her cupboard and merrily takes it out and mixes it
with house cash in the name of getting ‘chhutta’. She will never admit it
though.
My
accounting system is elaborate. The above – the notebook and my diary – are
primary records of day-to-day transactions. The secondary record is classified
just like a ledger. It has separate groups for groceries, milk, ready-to-eat
items, medicines, newspapers, stationery and books, clothes, repairs etc.
Whenever there is need to check some past expense, Amma keeps going through the
notebook and is unable to locate the expense in spite of spending a long time.
My classified system gives quick answers.
I have used
it in my class of Personal Income and Wealth Management course and I have
appealed to students to use it in their homes. Wonder how many would bother.
Some students staying in hostels had assured me that they noted all their
expenses. Nobody is going to enter them in a diary but a record on the phone or
laptop is easy. Factual information about expenditure is necessary for
expenditure control which in turn is necessary for wealth creation.
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4 comments:
I have been lax in accounting our monthly expenses. this is a good reminder to take time to see what I have spent. I rely on the bank summary of my accounts, but do not track cash. I use cash at the garden market. Local farmers bring organic produce once a week to a school yard near my house. Most of the vendors only take cash. Next time i go, i will make an effort! Leslie
First time I was in U.S.A., I asked my niece's husband to get me 'change' of a 100 dollar bill. He was stumped. He would have been required to go to his bank and that he never did. "Maybe from the petty cash box in your office" I said and that totally perplexed him. "Nobody uses cash here", my niece admonished me. In shops, at the check-out counter I would take out dollar bills and again she would tell me, " the ladies at the till would be confused, they are not used to it."
We in India happily use cash.
I admire you! I tried for a while, reconciling in and out and they never matched, I mean the accounts. I now only note how much money was withdrawn from the bank and how much is left with me at the end of the month! Where did the money go? I would know only the major expenses but everything else is miscellaneous. I guess that's why my wealth does not grow! BTW, why not use excel sheet rather than diary? You can see the month on month changes easily.
I don't think USA or any country has really become zero cash economy. Neither possible nor necessary in India.
This was a practice followed by my parents. I have kept their old expense diaries. It is amusing to read them.
My siblings do not bother I guess.
My training is in accounting also and so I have followed the principles of double entry book-keeping in keeping a primary and secondary (classified) record.
I write a diary and it is easier to scribble the day's expense in it rather than going to the computer.
I read a book by two economists a few years ago. It was a report of an experiment where 75 rural householders in Indonesia or Thailand were asked to keep expense diaries for about 6 months and conclusions were drawn from the data. All details about it elude me.
Who knows, in another 50 years, our records may fall in the hands of some economist or historian!
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