Make Money Online Taking Surveys for Beginners

In the event that you are new to paid surveys, you may possibly speculate how do I begin making money by taking on the net surveys? This article is a guideline for paid survey newbies and make sure you follow my step by step guidelines below to get on a speedy and good start.1. Keep in mind this: do NOT pay any person to do paid online surveys in any way. It is generally FREE to do paid surveys and get money. Authorized paid survey and market research firms do not charge you, in fact they pay you for your opinion.2. Create a devoted email account. You will receive lot of emails and you require a separated email address for survey invite emails. Note: you’ll have to turn OFF your spam filter or establish the spam filter option to do not erase emails in spam folder instantly, normally you may miss survey emails.3. You may well want to open up a free PayPal account. Various of survey sites provide their payment via PayPal. It’s 100% free to send money, and 100% free to accept payment in the event that you have a basic account, a low transaction fee make use of for Premier and Business Accounts to get cash, and it is generally faster than check payment.


4. Register with all the real online survey businesses you can find, starting with the top 10 cash paying survey panels. Be sure to verify your survey panel membership. This often entails clicking the link in the confirmation email coming from the survey panel following signing up. This is essential step for sign up. I recommend you take time to subscribe with ALL the genuine survey sites you can find. The cause is very basic, the more survey sites you sign up with, the even more survey invitation you acquire to do.5. Suggestions on staying away from scams.a. If you come cross a survey internet site, make sure to check their policy. If you are not content with the privacy or they don’t have an online privacy policy, avoid from them.b. Take note the main difference among paid surveys sites and get paid sign up offer internet pages. The later oftentimes state they are survey sites, in fact their particular main business is paid offers. They are the places you get paid for registering offers, and often you need to pay or offer credit card data while sign up non no cost offers.c. Avoid from any websites, paid or free offering known scam or spam, commonly those sites state they have a list of 300+, 400+ or even 500+ paid survey sites, the fact is there are NOT THREE HUNDRED survey sites that pay!) They are just marketing anything at all they can find for commissions, regardless of its scam or spam and can’t be trusted.6. Tips on performing surveys.a. Be genuine with your personal profile details when join with survey corporations.b. Response survey invitations promptly. Many surveys have quota and a lot of fill fast, especially large paying and fast to qualify surveys.7. Tips on getting paid.Make certain to keep the invitation emails for the surveys that you meet the requirements and finished, especially those on the web interactive surveys focus group. You want to have proof for your involvement when there is an issue.


8. Be patient.This is very essential for survey newbies. It can take a while to receive money since many survey sites have minimal payout need and it will take time for them to process payment. Likewise it requires a while to acquire more surveys. For me personally, I didn’t obtain any kind of cash or other benefits in the 1st month, I had several points or others but not plenty of to cash out, and the cash didn’t start arriving in until the end of second month. It is equally soon after two months, I began to get and meet the criteria for extra surveys, incorporating those high-end surveys such as online surveys and focus organizations.Performing paid surveys does not help to make me rich, but I delight in it. By way of the survey money I made, last year I bought a completely new laptop computer for myself! I also bought toys, DVDs, gifts, books and other products for my child, wife and family members. Paid survey undoubtedly is an easy to do and fun method to make increased spending cash, and it really worth my time!

Creating a Culture of Accountability

Airports are great places to get surprised and meet some wonderful people. During few occasions, I happen to meet few celebrities, politicians, my former colleagues and bosses and sometimes I chanced upon few people who are connected with me on Social Media, such as LinkedIn and Facebook. That day while I was traveling from Pune to Delhi through Spicejet (SG 184), I happened to meet Mihir Jaitley – the CEO of a leading multi-billion USD Automobile Conglomerate. Earlier I had met Mihir during few NHRDN and other leadership seminars and conclaves. However, getting a chance to talk to someone, who is as influential and successful businessman, as Mihir in a one-on-one conversation at an airport is a very different experience than asking them a question during leadership conclaves. I was not very sure if I should go and say, “Hello” to him or just let this opportunity go. Missing such an opportunity would have been very idiotic on my part. So, I gathered all my courage and walked towards him.

“Hello Sir, I am Sanjeev. I have heard you and met you during few leadership conclaves. Last, I heard you were in NHRDN conclave in Mumbai during 2014″, I said.

We raised our arms for a warm handshake.

“Hey, Sanjeev, it is nice meeting you. How are you”, he asked.

“I am good, Sir. Thank you. It is really nice to see you here”, I responded.

“Sir, you have unique ideas about how HR can contribute to the growth of an organization. Very unique from other business leaders”, I continued.

“Thank you, Sanjeev. What do you do?” he enquired.

“Sir, I work as Independent Management Consultant for last 1.5 years. I help start-up ventures; small and mid-size organizations in setting up HR Processes & Procedures, as well as helping them improve the performance of their employees. I also help organizations in preparing and grooming their new managers and coaching leaders for bigger roles. Before this, I have worked for 15 years with few organizations across India and outside of India”, I gave thorough reply while extending my business card to him.

“That’s very impressive. I like the phrase that you used in your description, “help”. Consultants don’t give free help. They charge a lot of money”, he replied with a sarcastic smile on his face, while extending his business card.

“Do you think anything can be done to improve the accountability of managers and leaders in an organizational set-up? Have you done anything in those lines”, he asked curiously.

As we were discussing, Spicejet staff made an announcement for boarding the plan.

“Sir, poor accountability is not a concern of one organization or an industry. It is there in all industries. I think the primary problem is not with managers or leaders but the way accountability has been defined. By definition, it appears like an attempt to fix the blame for a failure or crisis rather than giving an empowerment to concerned leaders to find a solution. When it comes to fixing the blame, many leaders are likely to surge it off”, I gave an empathetic reply.

“Yes, I have helped few organizations in making their leaders more accountable. I will be glad to help you too, if I get a chance to meet you again and explain the process”, I continued.

“Well, I just asked you this out of curiosity. We don’t have any such problem in our organization. However, I would like to know more about it. For next TWO weeks, I will be traveling out to other offices. I will give you a call after that. Let’s meet sometime”, I responded.

“Sure Sir. I will look forward to meeting you again. It’s been nice meeting you”, I told, as I picked my laptop bag to board the plane.

“Same here Sanjeev. See you. Bye”, he responded.

I didn’t get any communication from Mihir for one month. And I was in this state of confusion and anxiety. Should I wait or send a communication? Should I call him or send an email? He must be busy or else he would have sent some communication. Maybe he just said that he want to meet, in actual he don’t want to. Okay, let me send one email and see if he will respond or not. It’s just an email.

I sent a short email to Mihir, giving him a summary of our meeting and asking him if he would like to meet to take it further.

To my surprise, I received a reply from Mihir within one hour, sent through his iPhone, informing me that he remember our meeting, however, he is still traveling and will get back to me as soon as possible.

I didn’t get any communication from him for another TWO months, neither did I bother to send another email to him or call him. Then one day, on Tuesday, in the month of August, almost after six months of our airport meeting in February, I received a call from Mihir asking me if I am free on Friday and if I will be able to come to his office at 3 PM? I responded with affirmation. I had two days to prepare my presentation and be ready for, probably one of the biggest client meet at that point of time.

I was rehearsing my presentation as I was driving my black color Mahindra XUV 500 to his office in Chakan MIDC near Pune. After reaching the office, I was guided to the conference room. Mihir joined me in the conference room, along with a team of SEVEN people, including Head of HR, Nilesh Gaikwad. I was given ONE hour to complete the session.

Here is how I made the best use of it.

The majority of people in organizations today, when confronted with poor performance or unsatisfactory results, immediately begin to formulate excuses, rationalizations, and arguments for why they cannot be held accountable, or, at least, not fully accountable for the problems.

Most frequently heard statements are:

“That’s not my job”

“There’s nothing I can do about it”

“Someone ought to tell him”

“All we can do is to wait and see”

“Just tell me what you want me to do”

“If we only had the resources”

“The competition outsmarted us”

“The whole economy’s in trouble”

I am sure you might have heard these excuses from your team members and there are also chances that you have given these excuses to your teams, board of directors, customers, etc. Whatever the wording, all our justifications for failure focus on “WHY IT CAN’T BE DONE’, rather than on “WHAT ELSE I CAN DO.”

Let us first understand the meaning of accountability. (I asked the audience to share their understanding of the word accountability). Many people, including leaders, have totally wrong understanding of “Accountability”. They believe,

“Accountability means finding out who is at fault when something goes wrong.”

“Accountability is used to punish people for poor performance.”

“Accountability is management driven: it’s external, not internal.”

“Accountability means responsibility and obligation. It’s when someone outlines what you are supposed to do in a job description and then rates you A, B or C.”

“Accountability is something that is put on you by your boss. It causes unnecessary pressure, fear, regret, guilt, and resentment.”

“Accountability means being willing to stand up and explain what you did.”

“Accountability is a tool that management uses to pressure people to perform.”

The dictionary meaning of accountability is – the quality or state of being accountable; especially: an obligation or willingness to accept responsibility or to account for one’s actions.

By this definition, people only perpetuate a reactive perspective of accountability, one obsessed with the past and blissfully ignorant of the future. Consumed with dotting the “I’s” and crossing the “T’s” of their elaborate explanations for why they’re not responsible, people today are robbing themselves of the power of accountability – a power that The Oz Principle defines as the key to a successful future. In such cultures, winning in the game of life includes “covering your tail”.

The best definition of Accountability, therefore, is what has been explained in Oz Principle:

“Accountability: An attitude of continually asking “what else can I do to rise above my circumstances and achieve the results I desire?” It is the process of “seeing it, owning it, solving it, and doing it.” It requires a level of ownership that includes making, keeping, and proactively answering for personal commitments. It is a perspective that embraces both current and future efforts rather than reactive and historical explanations”.

There is a thin line that separates success from failure and the great companies from the ordinaries. Below that line is a set of individuals or leaders that foster a culture of excuse making, blaming others, confusion, and an attitude of helplessness. While above that line are individuals, leaders and cultures that breed an environment of a sense of reality, ownership, commitment, solutions to problems, and determined action. While losers languish below the line, preparing stories that explain why past efforts went awry, winners reside above the line, powered by the commitment and hard work. People and organizations find themselves thinking and behaving below the line whenever they consciously or unconsciously avoid accountability for individual or collective results. Stuck in what we call the “victim cycle,” they begin to lose their spirit and will, until, eventually, they feel completely powerless.

Now, you must be thinking of “staying on the line”, well, neither individuals nor organizations can stay on the line between these two realms because events will inexorably push them in one direction or the other. While both people and organizations can exhibit accountability in some situations yet manifest victim behavior in others, some issue or circumstance will arise to influence them to think and act from either an above the line or below the line perspective.

When individuals, teams, or entire organizations remain below the line, unaware or unconscious of reality, things get worse, not better, without anyone knowing why. Rather than face reality, sufferers of this malady oftentimes begin ignoring or pretending not to know about their accountability, denying their responsibility, blaming others for their predicament, citing confusion as a reason for inaction, asking others to tell them what to do, claiming that they can’t do it, or just waiting to see if the situation will miraculously resolve itself. This process, if unabated, can wreak both personal and professional havoc.

As we have seen earlier, individuals, leaders and teams when they demonstrate above the line behavior, they See It, Owe It, Solve It and Do it. These are also known as FOUR steps of accountability.

Why do people fail to see it? People most frequently fail to see reality because they choose to ignore or resist changes in the external environment.

Why do so many people fail to own it? People most often fail to own their circumstances because they cannot bring themselves to accept the accountability side of their story.

Why do people fail to solve it? As people begin solving problems they often encounter obstacles, expected and unexpected, that can stimulate a temptation to fall below the line into the victim cycle.

Why do people fail to do it? Most people who fail to Do It can’t or won’t resist the gravitational pull from Below The Line which can so easily drag someone back into the victim cycle, wasting valuable time, energy, and resources, ignoring and denying, making excuses, developing explanations, pointing fingers, getting confused, and waiting to see if things will get better. In our experience, this happens most often because people naturally resist the perceived risks associated with becoming fully responsible for results. A fear of failure can create a terrible burden that makes taking the final step to accountability virtually impossible.

Now that we have understood the meaning of accountability and concept of below the line and above the line, what shall be done to imbibe accountability as a habit?

Creating accountability in others is a process and doesn’t happen as a result of some singular event. Many leaders mistakenly think that once their people have been exposed to the concept of accountability and understand it, they will never fall below the line again. This “event” approach to accountability, the notion that accountability happens at an identifiable moment, doesn’t work. Leaders who make this mistake tend to use accountability as a hammer, nailing people when they fall below the line in an unending game of “I got you.” Such hammering will only propel people back into the victim cycle. Therefore, you must help people feel empowered by the concept of accountability, not trapped by it.

Therefore, whenever you hear a victim story or a below the line excuse, you shall use the following five key steps to coach that person away from reacting and toward learning:

1. Listening. Look for instances of victim behavior, and when you engage someone in a discussion of their victim story (for the purpose of coaching them) or hear “below the line excuses”, listen sympathetically to what they have to say.

2. Acknowledging. Acknowledge the victim facts and obstacles that someone thinks have kept him or her from getting desired results. Show the person that you understand their feelings and know yourself how hard it is to overcome those feelings. Agree that the challenges are real or that bad things do happen to good people.

3. Asking. If someone seems deeply attached to a victim story, gently move the discussion toward the accountability version of the story. Continually pose the question: “What else can you do to achieve the result you desire or overcome the circumstance that plagues you? What can we control, and what can’t we control in this situation? What are we pretending not to know about our accountability in this situation? What have we learned from our recent experience?

4. Coaching. Use the steps to accountability to help a person identify where he or she currently stands and where the person needs to go to obtain desired results. Emphasize that falling below the line on occasion is only natural but staying there never yields results. Stress how rising above the line will produce positive outcomes.

5. Committing. Commit yourself to helping a person create an above the line action plan and encourage him or her to report on their activities and progress. Don’t end a coaching session without setting a specific time for follow-up, allowing sufficient time, but not too much time, to elapse. If the person does not approach you at the appointed time, take the initiative yourself. During these follow-up sessions, continue to look, listen, acknowledge, ask, coach, and recommit. Provide honestly, caring feedback about progress, and express congratulations for every improvement.

In an ideal world, it wouldn’t be necessary for leaders to coach accountability because everyone would acknowledge their accountability in every situation. However, since this is not an ideal world, and since everyone is fallible, leaders must make coaching a daily habit. And while we have emphasized proactive coaching, which focuses on the present and the future, we have also come to appreciate the need for the review of the past, what we call accounting for progress. When handled properly, an after-the-fact accounting can provide a person with an opportunity to measure progress toward results, learn from previous experience, establish a sense of accomplishment, and determine what else can be done to get the desired results. While most leaders intuitively know the value of urging people to account for their actions, many often fail to do it well.

Ultimately, personal accountability means accepting full responsibility for results. It requires the sort of attitude popularized in the Nike footwear television commercials: “Just Do It.” If you don’t Do It, you’ll never reap the most valuable benefit that is derived from full accountability: overcoming your circumstances and achieving the results you want.

I finished my presentation in a huge round of applause. I shook hands with all participants and exchanged visiting cards.

As I driving back to home, I was trying to analyze the impact of presentation and trying to figure out probable response. Are they happy? Will they engage me? Is there anything I can improve upon? Exactly after TEN days of my presentation, I received a call from the HR Head, Nilesh, asking me to send my commercials as their Executive Team has decided to engage me for a pilot batch of coaching 15 Managers and inculcate accountability in their approach and attitude. Based on the outcome of the pilot batch, they will take a decision to engage me further or not.

I shared my commercial details. They seem to be happy with the results that I have managed to get with the pilot batch. Last month they have extended my contract and have given me another batch of 25 Managers.

Thereby, a small, casual discussion at the airport has been converted into a business opportunity.

To prepare my presentation and coaching assignments, I referred the following -

  1. The Oz Principle: Getting Results through Individual and Organizational Accountability, By – Roger Connors, Tom Smith, Craig Hickman
  2. Change the Culture, Change the Game: The Breakthrough Strategy for Energizing Your Organization and Creating Accountability for Results, By – Roger Connors, Tom Smith
  3. How Did That Happen? Holding People Accountable for Results the Positive, Principled Way, By – Roger Connors, Tom Smith

I will be glad to look forward to your feedback.

(Disclaimer: To abide by my terms and conditions of a contract and following confidentiality clause, I have changed the name of my client, industry and location of work)

Professional Accounting Bodies In Australia

What is an accountant? According to the Australian Accountants Directory they are, “a practitioner of accountancy or accounting, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and others make decisions about allocating resources”(“About Accountants“). As you may already know, different areas of the world have different professional bodies of accounting.

For example, not every country uses the American Institute of Certified Public Accountants (AICPA). As the name suggests, that’s only used in the United States. Australia however, has three legally recognized local professional accounting bodies; the institute of public accountants (IPA), CPA Australia (CPA), and the institute of chartered accountants of Australia (ICAA).

The IPA has been around since 1923 and continues to grow in the organization today. After 90 years it currently sits more than 26,000 members and students across 64 countries and is ranked in the top professional accounting bodies in the world (“Institute of Public Accountants“). They acquired a full membership of the International Federation of Accountants (IFAC) in 2005 as well as the Confederation of Asian and Pacific Accountants (CAPA) in 2011. They are really working towards building relationships and exchanging knowledge overseas. They are innovative in everything that they do as they already are recognized as one of the top 20 in BRW’s most innovative companies in Australia list for 2012. The IPA has three levels of membership, Associate (AIPA), Member (MIPA), and Fellow (FIPA). An Associate membership requires one to have an Australian Advanced Diploma of Accounting or a Bachelor’s degree in Accounting that can be Australian or equivalent in nature. MIPA membership requires Australian Advanced Diploma of Accounting, two years of pre-IPA program full-time work experience in accounting or related fields and a mentored experience program. A FIPA membership requires 7 years’ MIPA status or equivalent and 10 years’ experience in accounting the last five years have to be at a senior level (“Institute of Public Accountants“).

According to CPA Australia, they are one of the world’s largest accounting bodies with a global membership of more than 150,000 members working in 120 countries around the world, and with more than 25,000 members working in senior leadership positions (“About Us“). They provide education, training, technical support and advocacy. They were an early entrant in the Asian Market, where their involvement began in the early 1950s and aimed at developing and strengthening the accounting profession in the region. As of today almost one-quarter of CPA Australia’s members reside outside of Australia, with over 35,000 in Asia. They currently have nineteen staffed offices across Australia, China, Hong Kong, Malaysia, Singapore, Indonesia, Vietnam, New Zealand and the UK. To become a member of this program candidates most hold a postgraduate award that is recognized by CPA Australia, and demonstrate competence in the required knowledge areas and, within a six year period, successfully complete the CPA Program (“About Us“). They must also have three years of professional experience in finance, or accounting for business. To offer public accounting services, CPAs must also complete CPA Australia’s Public Practice program, which involves distance learning and a residential component, and must hold a Public Practice Certificate in accordance with the CPA Australia’s by laws.

The ICAA is the professional body representing Chartered Accountants in Australia. They currently have over 50,000 members and 12,000 students(“News and Updates“). In order to become a member of the institute, one has to complete the Chartered Accountants Program which includes study of Graduate diploma in Chartered Accounting (GradDipCA) and three years of practical experience. Entry is available to anyone who holds an accounting degree; however, those holding non-accounting degrees can also be permitted entry after additional requirements are met. If one does become a Chartered Accountant they must complete a total of 120 hours of Continuing Professional Education every three years. The ICAA is a founding member of the Global Accounting Alliance (GAA). Members of this alliance are part of the international accounting coalition of the world’s premier accounting bodies. Chartered Accountants audit 100 percent of the top ASX-listed companies in Australia. They are recognized by the international accounting bodies of the leading financial centers of the world. As of November 2013, the ICAA merged with the New Zealand Institute of Chartered Accountants and are now known as “Chartered Accountants Australia and New Zealand”(“News and Updates“).

Compared to the professional bodies in America the ones in Australia aren’t too different judging from the research. They each go off of the same principals in a sense but there are very few minimal things that are different.

Works Cited

“About Accountants.” Australian Accountants Directory / Australian Accountants Directory / Accountants. N.p., n.d. Web. 07 Apr. 2015.

“About Us.” CPA Australia -. N.p., n.d. Web. 03 Apr. 2015.

“Institute of Public Accountants.” Institute of Public Accountants. N.p., n.d. Web. 07 Apr. 2015.

“News and Updates.” Chartered Accountants Australia and New Zealand. N.p., n.d. Web. 05 Apr. 2015.

A New Domestic Accounting Model based on Domestic Well-Being

Summary of Rationale and Technical Introduction

Other articles on Domestic Well-Being Accounting (DWBA) have hinted about the new ideas upon which this new domestic accounting model is based. In this article, the rationale, ideas and concepts are summarised, based on the coverage in a new book ‘Accounting for a Better Life’.

Accounts

At its simplest, an account is just a list of transactions relating to some area of financial activity or interest. The most familiar form of account is the bank statement that customers periodically receive from their bank.

The first important thing to appreciate is that accounts are for accumulating information about value. We are so used to bank and credit card accounts which are all about currency that people sometimes do not realise that accounts are equally useful for accumulating transaction details relating to, for example, our home, our car(s) – one account for each car – our investments, etc.

Accounts will usually have two columns, one for increasing (+) amounts and the other for decreasing (-) amounts.

The next important concept is to appreciate that there are two distinct, overarching types of accounts that we can use in our sets or books of accounts. One is called an asset account and the other is a liability account.

The asset type account as its name infers, typically relates to storing transactions for assets such as bank accounts, houses, cars, etc. The idea behind this is that positive amounts entered into the + column of an asset account signify increasing value; so £500 entered into the + column of an asset account implies an increase in value of £500. However accountants will also have in their business accounts, what I call working accounts for home accounting, as other accounts of the asset type which are not strictly for an asset such as a car or home. Examples include accounts for asset acquisitions and for depreciation.

That other overall type of account is a liability account. It is used for accumulating debts and/or liability. Now we have the reverse concept in that increasing amounts e.g. £300 in the + column of these types of accounts imply more debt or more liability, whilst a decrease of £200 represents less of a debt. You might think more debt means less value but it all depends on the purpose for which a liability account is being used. Again, accountants mostly use liability type accounts for holding true debt amounts but again, have a need for other accounts of the liability type to mediate certain transactions. I refer to these as working accounts in home accounting as they do not relate to any true debts of a person or household; examples of these are for accumulating temporary information about asset acquisitions and growth in the value of a home.

Another area for confusion here relates to the names for column headings used in the different software packages available to support accounting; in business, the convention is that debits (the + column for asset accounts and the – column for liability accounts) are traditionally in the left-hand column of each account, with the credits on the right (the – column of asset accounts and the + column of liability accounts). This convention is not always adhered to in some software packages, together with not always using the headings, debit and credit.

Double Entry and the Accounting Equation

The last bit of theory to mention which lies at the heart of DWBA accounting is so-called, double entry. This concept appears confusing to people because it has two aspects. First, it is an accounting concept which relates to an approach for taking into account (there’s an appropriate phrase!) all the financial aspects of some financial entity. In business, an entity might be a department or a division, a sole-trader or even a whole plc. For domestic accounting, such an entity would most often be an individual or a household. The point is that the accounts supporting any of these entities consider or model the totality of the financial aspects of the entity. As such, the accounts will be able to capture and make visible both the static and dynamic aspects of the entity finances. The practical effect is that a set of double entry accounts (the books) requires an account to store the total financial value of the entity as well as usually, some accounts for accumulating periodic changes in terms of increases and decreases to this overall value. The result is what is termed a balanced set of accounts, related to an accounting equation.

The other common use of the word double entry is related to the bookkeeping techniques for implementing this form of accounting which requires two (double) entries in the accounts for each new transaction, in order to maintain the required balance.

What do we mean by balance? Well balance is the key to double entry and it comes from balances in accounts, as maybe related in some way in this equation; the so called accounting equation.

If we consider a household, it might consist of a collection of assets – a home, a car, three investments and a consolidated bunch of unspecified appliances. We could set up 6 accounts to represent all these assets and assuming there were no liabilities of the personal debt sort – an unlikely assumption – we could say that our domestic wealth equals the sum of the balances of those 6 asset accounts. Here is a statement, which is not yet a true equation:

The sum of all Asset a/c balances = our Domestic Wealth

Now if we had some debts, perhaps a mortgage on the house and a loan for the car, we could set up two more accounts (of the liability type) to hold these two debt amounts.

Since we owe two amounts for these debts to some financial organisations, we have to earmark the appropriate amounts to be repaid from the value of our assets, in order to derive the changed new value of our domestic wealth, so we can show this in another statement:

All Asset a/c balances – All Liability a/c balances (of the debt type) = our Domestic Wealth

The crucial point about the double entry system is that we need to setup an additional account in order to store the amount of our changing domestic worth. I call it a Domestic Wealth account.

Now, instead of a statement, we have an equation which is balanced:

All Asset a/c bals – All Liability a/c bals (of the debt type) = Domestic Wealth a/c bal

The next issue is what type of account do we need to hold the domestic wealth – asset or liability?

When you think about it, the amount of the domestic wealth represented by the assets less the debts is owed to the eventual beneficiaries of the household or individual’s estate. It should therefore logically, reside in a liability account.

Now we can tidy the equation up by putting all the asset type accounts on one side with all the liability type accounts on the other; the result is with appropriate changes to the signs:

All Asset a/c balances = All liability (debt) balances + the Liability (DW) a/c balance

Let’s imagine a situation where an individual starts up with £20,000 in a bank. For that individual to establish a double entry accounting system, we need an asset account for the bank account and since there are no debts, just a domestic wealth account; a double entry is required for the initial transaction, with £20,000 debited to the asset account for the bank and the same amount credited to the liability account for domestic wealth. In the accounting equation, we can see the result as:

Asset a/c bals £20,000 = All liability (debt) bals 0 + Liability (DW) a/c bal £20,000

Let’s see how we handle buying a car with a loan of £2,000. By breaking it down into steps, we first consider receiving a loan – so receive (debit) bank with £2,000 and setup a new liability type account for the loan company and credit it with the same £2,000 – with this effect in the equation:

Asset a/c bals £22,000 = All liability (debt) bals £2,000 + Liability (DW) a/c bal £20,000

Still balanced at £22,000 on each side!

Now we buy the car for £7,000 using the £2,000 from the loan and the extra £5,000 from the bank assets. We also need to setup a car account to receive the value of the purchased car. The end result from the equation perspective is still a balanced equation:

Asset a/c bals £22,000 = All liability (debt) bals £2,000 + Liability (DW) a/c bal £20,000

The asset a/cs are now made up of Bank (£22,000 – £7,000) and car a/c £7,000 with no change in overall value on the asset side but a distribution in values across the asset accounts.

Another thought about double entry is that any single entry made to a balanced equation (set of balanced accounts) must unbalance it! The only way to retain balance is, from the maths perspective, if we add something to an account on one side then we must add the same amount to an account on the other side; or if we add something to an account on one side we must reduce by the same amount, in an account somewhere else on the same side. This in effect, if you work it out, is what the accounting rule says in that a debit posting must be balanced with a credit posting.

As we buy food, drink and clothing, pay utility bills and purchase holidays, we will see reductions or credit in our asset account for bank or, if we pay by credit card, equivalent credit entries to increase our debts in the liability type account for each credit card. These are termed expenses and will lead to an equivalent decrease in our domestic wealth. It should be obvious that if we post credits as the first part of each expense transaction, we will need corresponding debit entries to balance them. Increasing debits imply an asset type account so that will be the sort of account that we need for these increases. By the same logic, income such as salary or pension will be first entered as increases or debit entries in our bank account and must be balanced by credit entries in a new account for domestic increases – increases that are credit entries occur in liability type accounts so this is the sort of new account we need to setup for accumulating changes for increases to domestic wealth.

Non Double Entry Accounting

Traditionally, accounting for personal and home use has not made use of the principles of double entry; and the software packages that support home accounting are not usually geared up to properly support it. The reason is partly because when people ventured into home accounting, they tended to start with activities such as reconciliation of checking accounts and simple budgeting. For this, they tended to only require setting up accounts for one or two areas, mainly related to bank accounts. With this, as useful as it is, there is no concept of seeing the total picture, with the static and dynamic views of the financial state of affairs.

Business versus Domestic Accounting

When I first decided to start ‘doing’ my own home accounts many years ago, I believed that since business accounting had evolved over such a long time to be able to so successfully satisfy business managers’ needs to manage business finances (and there was a legal requirement for them to do so) there must be something special in business accounting that I could look for, to be able to help people better manage their personal and home finances. As described elsewhere, I discovered that business accounting methods themselves were of little help because of the wrong focus (profits for capital gain) and that the actual accounts, reports and associated business ratios were also, understandably, entirely inappropriate.

In thinking about alternatives, I realised there were some features that could be extracted from business and with modification, be used effectively to help manage home finances.

Reports

With the double entry system we can obtain a static view or ‘snapshot’ of the state of the finances of a business and this is called a Balance Sheet. This shows the assets, liabilities and capital value on any particular day.

Most of the entries in the business Balance Sheet come from balances in the accounts which can be easily extracted from a Trial Balance which is simply a list of all the balances for all the accounts in our books.

The structure and contents of the Domestic Balance Sheet (DBS) highlight the major components of the domestic assets and liabilities in order to derive the new value of Domestic Wealth. Rather like the net profits being brought into a business balance sheet, the domestic version shows the Total Domestic Change (TDC) as the contribution to Domestic Wealth over the past period.

Now, the important issue is what does the TDC consist of? We probably know that the business equivalent of profit or loss is exposed in the two accounts – the Trading account and Profit & Loss account. These two accounts highlight the dynamics of the financial situation; the changes over some period.

For business, the focus is on profits and so these accounts concentrates first, on the higher level aspects of the business with opening stock, the purchases made to augment this stock and the closing stock value.

The next account called the Profit & Loss account shows the impact of other increases and decreases which usually reduce the gross profit to some lower value, called the net profit.

The individual accounts required by business have no place in home finances as we are not primarily interested in profit.

The new Focus – Domestic Well-Being

What should the financial focus be for a home finances? Well I gave much thought to this and over some years and developed a new focus with an associated approach and methods, based on what I eventually termed, Domestic Well-Being.

In short, yes, homesteaders do want to increase their worth or value, but not usually for ‘profits sake’. People want to increase their wealth to pay for things that tend to occur in a progression throughout a lifetime; like better homes, education perhaps, hobbies, luxuries and provision for those retirement and eventually, declining years when income is drastically reduced.

In general, home finances in the earlier years of a lifetime are such that there is never enough to go round. Everything is a question of priorities and balance. What should be the best distribution of our expenditure to ensure that we can obtain the best possible balance or compromise, with the income at our disposal?

My solution was to come up with a structure that best presented the major areas of domestic finances about which decisions could be made on how best to allocate funds – those alternatives and their prioritisation. So I needed a way that could be used to classify increases and decreases as and when they occurred, as well as for presenting the figures in an appropriate way after they had been accumulated. This presentation had to support the decision making that would be needed to best optimise future spending. It had to be done in a way that could achieve this best balance across the competing priorities so as to maximise Domestic Well-Being. It was therefore DWB that became the new focus for domestic accounting; and it could be identified in terms of a structure for both bookkeeping – capturing the transactions; and accounting – reporting, analysing and the subsequent decision making for future financial activity, implemented perhaps through budgeting.

The Domestic Well-Being Statement

The Domestic Well-Being Statement (DWBS) is the domestic version of the Trading account and the Profit & Loss account and is used to present the derivation of the Total Domestic Change (TDC) over some period. It represents the second of my adopted features from business accounting.

This report simply shows the structure for DWB and is obtained in Microsoft Money with one click to run a pre-stored report. The edited version combines the details for the current and previous years to assist with comparisons.

In summary, the report shows the three top-level Categories of the structure as the Basics, Discretionary and Others groups of transactions, each divided into Increases and Decreases. These categories might be considered as similar to business accounting nominal codes.

Within these groups there are successively lower level groups of sub and sub-sub categories. For example, the Basics included Essentials, Responsibilities and Family, each with further sub-categories below.

The Discretionary group, where obviously there is some amount of discretion or choice as to whether decreases and increases occur in its component sub-categories, includes Nice-to-Have, Investment for the Future (IFF) and Luxuries.

What amazed me when it was first developed was the fantastic visibility it provided on the home finances, especially showing the distribution and makeup of the many expense items.

Financial Ratios

The third feature that I adopted from business accounting is the use made of financial ratios.

You will appreciate that a ratio is simply a comparison of two figures expressed as a quotient, usually in decimal or percentage format. In business over time, certain key quantities and their comparison in the form of ratios have taken prominence as a key to both information dissemination (for shareholders, investors, management boards, auditors etc.) and to various levels of management as a basis for control. Those two components of a ratio, the numerator and denominator, can both be considered as candidates for achieving change.

Over 30 business ratios slim down to few that most people have heard of, such as the different forms of margins and the ratios associated with profitability and liquidity; and of course virtually none of them relate to home finances!

From my experience, I knew that the figures I had exposed for domestic finances must have some potential for assisting in the management and control of home finances. The issue was which figures and in particular, which groupings of pairs of figures as ratios might be informative.

The Stages of Domestic, Financial Life

My other experience was with life; now 68, I realised looking back on my lifetime of interest in home finances, I could distinguish six fairly distinct stages of financial life. By this, I mean that there was a significant enough change in some aspect of personal finances across the stages that might warrant some form of indicator or measurement being useful. For your interest, I call these stages:

Early Adulthood

Early Maturity

Middle Life

Retirement

Declining Years

I have defined five primary factors and a number of secondary factors for domestic finances, changes in which I believe, have a correlation with those stages of financial life and could be useful as a basis for comparison and more detailed analysis.

The Domestic Financial Factors

Briefly, the more important ratios over some period are (where the abbreviations relate to figures in the DWBS):

Basic Cost of Living Factor (BDD/THI) – a measure of the amount spent on basic necessities, out of total household increase.

Well-Being Contribution Factor (DDD/THI) – a measure of the amount spent on discretionary extras, out of total household increase.

Future Affordability Factor (IFF/TDI) – a measure of financial commitment to future well-being, out of total domestic increase.

Feel Good Factor (IFF/DDD) – a measure of how much went on future well-being, out of total discretionary decrease.

Domestic Wealth Factor (TDC/ODW) – for positive TDC the domplus, or for negative TDC the domicit, contributing to growing or diminishing domestic wealth respectively, as a proportion of old domestic wealth. This is the nearest comparison to business profit or loss.

To start with, lacking any reservoir of accumulated figures, the value of these ratios or factors as I call them for home use, will only be of use internally in a household over time, as a means of measuring and looking for changes. With a base of figures, then there would be the possibility of comparison with others and the similarity to business norms.

Value for these five factors give ‘shape’ to a financial situation and if displayed in the format of a star or radar diagram, could also offer useful indicators that could help to predict problem areas or states of stability or instability about a set of finances.

With an accumulation of values for the domestic factors, either by simulation or by capture after creation by individual home owners, it would become feasible to create and provide further useful charts. With such information, the home owner would be able to determine if the individual figures from the accounts appeared to lie within the expected domestic norms.

Other Graphics

A picture speaks a thousand words. This is no truer than when considering displays of financial information. Such graphical charts are the fourth set of business features of the sort of products that can easily be created with general purpose accounting software packages such as MS Money, especially if double entry accounting is used.

Financial Control

For home finances, control is both feasible and realisable and is only limited by the extent to which homesteaders wish to go. It all comes back to a need for a sense of responsibility.

The analysis should first look at distribution and balance. Are the proportions being spent on the Basics a fair amount compared to the total increases?

The information obtained from your end-year results should reveal some fundamental facts. Have you been able to afford anything over and above the basics? If yes, did the amounts enable a reasonable allocation to discretionary decreases; and what about luxuries?

Your accounts and this new set of accounting methods will give you the data and information to enable you to pick up warnings.

What sort of warnings might you want? In today’s climate of a financial debt crisis, probably the most important warning you would look for is one relating to the likelihood of such a pending crisis for you. You would want to know if your decreases are getting too close to your increases, or even exceeding them. You would want to know if your reserves are being depleted, possibly on funding that excess of decreases over increases. You should be looking to see the amount of short-term and long-term liabilities you have; and how their proportions compare to the total value of assets. You would want to know about your liquidity; how well you are able to realise funds in the short term to meet your known commitments. You obviously do not want to sell your house or car just to pay the bills.

On a less dramatic but more important note, you need to know about the proportion of contributions being made to future well-being; and if positive, does the amount being put aside represent a reasonable proportion of your increases?

Conclusion from Adapting Business Accounting Concepts

In order to implement the features I have extracted from business accounting, I needed to be able to use the concepts of double entry.

Simplification

In undertaking home accounting with double entry, the main difficulties related to knowing where I was in relation to individual accounts and the entering of transactions. By this, I mean that when looking at a single account register on the computer screen, it never appeared obvious to me what sort of account I was looking at and into which column of the account, the next posting should be made.

Over time, I realised that the key to understanding the answers to this dilemma lay with the accounting equation. I needed a way to always be able to associate any account with its place in the accounting equation – asset or liability – and to which account it should be associated in order to achieve double entry balance.

Like many amateur accountants I often had problems with reconciling the concept of debts in accounts for mortgages and loans, with a so-called liability related to an amount in a capital or domestic wealth account. To me, domestic wealth was a ‘good’ liability – more was better – whilst the mortgage and loans were ‘bad’ liabilities or debts that had to be repaid; and more was not better, but worse! I resolved this by considering all the accounts that were associated with domestic liability as quasi-liabilities – good liabilities; the amounts or the balances of liability held in these accounts, I considered as ‘good’ liabilities. They were given the letter Q in the appropriate prefixes.

There are a total of four accounts that fell into this quasi group which consisted of the Domestic Wealth account (LQ DW), the Domestic Changes account (LQ DC), the Categorised Increases account (LQ Cat Inc) and the Categorised Decreases account (AQ Cat Dec).

The majority of the changes to domestic wealth over any period come from the decreases associated with expenses such as food, drink, clothes, utilities, holidays etc – virtually all of the Basics and Discretionary decreases. These also end up in the LQ DW account via the LQ DC account but because of the way I handle most of the double entry postings, they arrive via those two quasi accounts for Categorised Increases and Decreases.

Implementation

I initially chose one of the earliest versions of a generalised accounting software packages called MS Money. Being generalised, it provided the capability to create accounts as needed, with any name you chose.

It also had good integrated query and reporting capabilities, together with the concepts of payees, categorisation tags and support for budgets as well as for stocks and shares.

In thinking about the implementation of double entry, MS Money was not designed primarily for double entry. If it was, it would have some journal-like arrangement similar to dedicated double entry accounting software, whereby each transaction is associated in some way with the two accounts involved in the double entry. Then, via a key-click or later batch updating, the two individual postings would be made to the appropriate two accounts.

This does not mean to say however that this software package cannot be used for double entry postings. All it requires is that after adding the necessary extra accounts, that two entries are posted for each transaction entered.

One form of categorisation available in MS Money is its Income and Expense tags. Money comes pre-loaded with tags associated with home finances so that for example, with a simple account (non-double entry system) for reconciliation with bank statements, each transaction could be associated with an appropriate tag, such as wages, food, etc.

Income and Expense are the terms used in MS Money to relate to the accounting terms of debit and credit; Perhaps trying to be helpful to home accountants, MS Money has differing column headings for the increases and decreases across all the various types of accounts that can be created.

In trying to find a way to implement the tagging I needed to associate transactions with the DWB structure, as well as achieve double entry to support the concepts of static and dynamic reporting, I came up with a method that achieved both; without the need to enter transactions with hundreds of double postings.

The 1st halves of the appropriately, categorised double entries accumulate in the accounts where they were entered, mostly bank or credit accounts but that is unimportant. At the end-of-period by running a single report, the sum of the amounts of the 1st half entries can be easily exposed, contributing separately to increases and decreases to domestic change. By then entering just two more postings, one for the total of the 1st half increases and another for the total of the 1st half decreases, balance is re-established.

Summary of the Approach

The main features that I have adopted from business accounting are the ability to create balance sheets for static views, to capture the financial changes over a period for the dynamic aspect, to define ratios/factors as a comparison of useful and significant figures from the balance sheet and the changes, as well as the use of graphical reports to enhance visibility and meaning.

As a thought about setting up your own DWB accounting, my book describes the background and theory, together with the details and prototypes for accounts, categories, reports and graphics on a bonus CD, for implementing the accounts on MS Money.

Regarding implementation on dedicated double entry accounting software packages, I have not yet discovered any that are sufficiently general-purpose to enable the creation of accounts of your own choosing, together with your own details of categorisation.

As a final thought on simplification, life in the accounting world can be made much easier for domestic accountants, if the terminology is simplified as much as possible. It will be important not to remove too much of the distinction between some of the technical words but I have found that I have made life much easier for myself, by simplifying, wherever possible.

An understanding of one idea – double entry – and the following, six key words, will get you through with flying colours: asset, liability, debit, income, credit and expense; and my version of the domestic accounting equation, account prefixes and a couple of ‘memory joggers’, will tie all these features together.

Also, take a look at the author’s website on Domestic Well-Being Accounting, together with sample products and a growing list of tutorials at www.dwba.co.uk; the full rationale and technical introduction with supporting charts and graphics is at:

http://www.dwba.co.uk/pages/DWBA_Technical_Introduction.htm

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