I had an interesting conversation with a friend who is an accountant. He said he is actually an auditor and not an accountant….but since he has a Bachelor’s in Accounting and a Masters in Accounting I say he is an accountant.
My friend mentioned that he is trying to balance his budget because his outflows are more than his inflows and he has already started dipping into his savings.
Now this struck me as a bit strange since I thought that someone who was trained in accounting would be able to balance a budget. He claims that he is not able to balance because things are expensive and he is not getting a raise.
My thoughts are that
1. I am sure he is making more as an accountant than I am making as a teacher
2. He should know how to balance his budget because he was specifically trained in such things.
3. He needs to manage his cash flow better
I already know of one area that he can back on but I did not mention it to him because I felt he was getting a bit defensive. You can make a little bit of money and have high expenses but still find a way to manage your cash flow.
If your expenses are consistently higher than your income then you MUST find a way to change that. Does he
have cable
drive a lot
not use coupons
use a lot of electricity
I know he drives out of town a lot on weekends to spend time with friends and based on the drive I am estimating about $60 in gas that he could save if he did not make so many trips.
He claimed his electricity bill is high saying ‘it is winter time’. Well I am sure he can cut the high electricity bill down a bit by
using a space heater instead of the whole house heater (he lives alone in an apartment)
wearing layers to sleep
turning off the computer (he is always online)
looking for another electricity provider
However he chose not to do those things and yet complains about the high bill. I think he needs to stop looking at what he makes and start looking at what he can cut from expenses or find another way to make money. I guess he could start a blog!
What advice would you give my friend as to his situation?
Accountants, Economists, and Financiers all sort of rival each other in different ways. As a finance guy, I would say accountants are great at tracking expenses, but they have no idea with the numbers mean! Thats not always true, but you know…
Your friend should probably look at his food budget too. Many single folks either spend A LOT on food, or very little, depending on their personal life.
Single folks tend to buy themselves a lot of things, clothes, electronics, cars, etc. An MSA can potentially make good money, more money than the average American family for sure. They have a lot of income that is potentially blown on things like that.
He should also look into how much he’s paying for an apartment. It doesn’t matter where you live in this world, there is a deal to be found near by that is cheaper, relatively speaking of course.
I quite agree with you on all points. He said he buys the store brand food and eats ramen but I think he blows money on restaurants.
It sounds like your friend is aware of his situation however he is not concerned enough to make lifestyle changes. If he really wants to “balance” his budget he’ll approach you for money saving advice.
The economy has jolted many individuals enough to wake them up in regards to their spending and saving. Perhaps your friend is a heavy sleeper. ~ Solid Planning
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I say he should seek outside help to balance his budget even though he’s an accountant. He should also do his best to pay off his highest rate debt instruments as quickly as possible.
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programmable thermostat. Especially if he is gone on the weekends a lot, or if he is gone during the day. Huge Savings. He can set it to have the house warmed up by the time he wakes up, and then shut off to save money while he is gone. If he sets the evening temperature for just before he returns from work, his house will be warm and waiting for him and he will never even need to know it cold. Plus he can have it drop again soon after he goes to bed.
My guess is, he just doesn’t really track where his money is going. Cause I am with the weakonomist and I think he could probably cut a bunch of money out food. Clearly he is not a loyal reader to your site.
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I think a lot of financial people can be that way. They are trained in math and you would think it would come easy, but just like other jobs.. you don’t want to do it at home after you’ve dealt with it all day.
Some people too would rather just say they can’t do it and keep living the lifestyle they can’t afford and go in debt for it instead of living within their means. There are so many ways to cut expenses.
Like you said before, does he have cable? how about cell phone? Maybe he should consider liquidating a few things if he can’t afford the way he’s living.