Why accounting is important - even for non-accountants
As a non-accountant, you might wonder why accounting is important to you. It’s natural to think, ‘I don’t need to know about accounting. That’s what accountants are for.’ Besides, you might think, how could you possibly ever understand all those difficult numbers and complicated financial reports?
But not so fast! Even if you never become the Head Accountant at a large firm - or fully understand the details of a balance sheet - a basic knowledge of accounting will benefit you greatly at home, as an employee at a workplace or as the owner of your own business.
Accounting at home
Think of a personal financial decision you made over the past week. Maybe you decided to treat yourself to a fancy dinner, or start a Netflix account, or buy a mobile phone. Whether you knew it or not, you probably used a simplified version of accounting when coming to the decision. Instead of using complex financial statements, however, you probably figured it all out in your head.
The challenge with making personal financial decisions in this way is that you likely don’t have a set plan - or an organized system in place - to make the most informed decisions. But the more you know about accounting - and the more you are organized in your methods - the better able you are to keep track of your expenses and plan your finances. This will help you control your debt and lead to a healthier financial future. And this, in turn, will increase your sense of security and personal well-being.
You might even feel less stress over treating yourself to that fancy dinner or buying a higher-end phone!
Accounting as an employee in an office
Are you currently a decision-maker at your workplace? Or do you hope to become a manager someday? If so, you will need accounting information for many purposes, including:
establishing pricing strategies
figuring out where to allocate funding
setting budgets
A knowledge of accounting can also help stop you from making costly mistakes, taking unnecessary risks and even getting yourself into legal trouble. Finally, it will increase your employability in the eyes of current and future employers.
And if your goal isn’t to become a manager? Well, an understanding of accounting will allow you to make informed suggestions to those who make the decisions. Your organization as a whole will benefit the more people know about accounting.
Accounting as an entrepreneur
Whether you are a committed entrepreneur or running a side hustle, a little knowledge of accounting can go a long way. Even the most basic accounting practices will allow business owners to stick to budgets, manage their finances, and plan for the future. The financial reports they generate also show proof of profitability to stakeholders and potential investors.
Furthermore, if you handle the accounting yourself, it means you are not paying an outside accountant to do it. If you keep everything accurate, organized, and up-to-date, it will help you keep your business in good financial condition and make your life easier when tax time rolls around.
Knowing about accounting will benefit you personally and professionally. And once those numbers start becoming less difficult and the financial reports less complicated, you may even find that accounting is easier and more enjoyable than you previously imagined!
If you’re interested in learning about accounting and all things finance-related, then check out these courses: