Wise Accounts Blog

Buying and selling would not be possible if we didn't have a reference mechanism to trade goods and services against a token value.

Since biblical times gold was used for that very purpose. In 1968 in the US you had the assurance you could swap your dollars at the rate of $35 per ounce of gold.

Gold and silver coins were the common means of exchange all the way to the 20th century. It's only very recently that the Bretton-Woods accord was dismantled

Credit cards are so widespread because of the convenience of not carrying cash wherever you go plus the appeal of having a permanent unsecured line of credit.

It is such a boon for banks who collect their commission along the way that they absorb and manage all fraudulent transactions themselves.

With the advent of the internet the question arose as to how one could send money via email. The answer was PayPal.

It seems each time the integrity of money is at risk - convenience wins. If enough people jump in the pool then those who sit on the side line are missing out on all the fun (sorry, I meant profit).

For a web merchant the choice is bleak. Either you make the sale on EBay or the buyer will find a click away someone else who gladly will. And so the system gathers momentum.

The global economy has been a bonanza for exporters in Third World countries who can flood the market with cheap goods produced by enslaved labour. It also means that western democracies have forgotten how to make staple goods which are now deemed cheaper to import. Talk about sovereignty and financial independence.

Only ten years after the introduction of the euro, the Greek debt crisis has shown countries the dangers of relinquishing their national currency.

Things are so interconnected and leveraged that one hiccup in one place can cause havoc at the other end of the globe.

Nowhere on the face of the earth can you pretend you are immune to this turmoil.

You now see the emergence of Gold Buyers stands in every shopping centre. Obviously someone thinks it is important to buy gold from private holders.

When the monetary system collapses (not in my lifetime, thanks) what will you sell to buy your next meal? Your dog? Your wife? Your children? What about having some gold or silver in reserve hidden in a hollow...

Young adults are delaying leaving their parents home because it is their only option to save enough for a deposit on a dwelling of their own.

If your rent or mortgage repayment exceeds 30% of your household income that housing is deemed unaffordable.

Unfortunately real-estate unlike the stock market does not crash down to reality very often. Even though house prices are roughly double what they ought to be there is no sign of a drop any time soon. The government is guilty of adding to the trouble: interest rates keep rising and the first home buyer's grant was quickly absorbed by the market.

Who profits from the situation?

Realtors The more expensive the property - the higher the commission.

State government The more expensive the property - the higher the stamp duty.

Local councils The more expensive the property - the more rates they can levy.

Land owners By releasing housing land on a drip-feed you can keep the prices up just like OPEC manipulates the price of crude oil by reducing production.

Residents of leafy suburbs Banning medium density housing maintains the prices high by keeping out tenants, migrants and other undesirable citizens.

Sollicitors Conveyancing is kept complicated so that only a profession of experts can benefit from a service which does not provide real value to anybody.

Banks The higher the property value during the course of the loan - the higher the collateral is case of foreclosure.

Everybody loves the price of their property going up until they have to sell and buy to relocate. Then they realise that after taxes and commissions are paid they would be better off staying where they are. The price of their house has gone up indeed but so have the prices of all the other houses they would like to buy...

One strategy would be to engage in a scare tactic to motivate beachfront residents to sell up in panic because of rising sea levels and coastal erosion.

Another alternative would be not to live on land at all. Have you considered living on a yacht? Changing the view from your window as you travel from place to place. Too bad you can't get a job to suit the lifestyle unless you traffic in drugs or other illegal goods...

What about living in a motorhome? Camping is great for a holiday but as a permanent lifestyle you might want to see how you survive your first winter before you make such a move.

Not being able to account for how much you owe and how much your own is a disease that can be cured! Yes the reality of those figures is something you'd rather forget about - but that doesn't make the problem go away. A stiff drink isn't the solution either.

Little streams make big rivers. You may not consider yourself a numbers person but in this world and age everything revolves around money. So be courageous and build yourself a dashboard of where you stand financially.

Wise Accounts is the no-brainer online accounting system to enter your receipts and paychecks. Having this basic information in the system has some significant benefits. By knowing the frequency and the amount of your outgoings and of your income Wise Accounts can forecast your cash flow into the future.

Wouldn't it be nice to know ahead of time if you are heading up or down? Not only that but what about knowing right now how much tweaking in your spending would it take to bring you back to a balanced budget?

It maybe not be that hard to pull yourself out of that financial hole you're in. There is only one way to find out - do the figures! There is no need to be a hero and wait until you have to file for bankruptcy. There might still be something in your power to redress the situation.

As you build your financial records you will keep your finger on your financial pulse. You may have a spark of inspiration and find ways to re-finance things (oh no, not another credit card, thanks!). As you get your grey matter working on the subject you might come across a way to do more with less, to change your consumption, to sell something you don't need, to move to cheaper accommodation, to take on a second job, to burn the candle at both ends... (OK, there is a limit to all that pep talk. But you get the drift. Do nothing and nothing will happen.)

At the end of the day you have to take charge of your own life. The flip side is that coming on top of thinks will empower you to be in control but more importantly to be able to help and guide someone else through the same journey. Wouldn't that make everything worthwhile?

"Not enough money at the end of the month" has to do with living freely (carelessly?) not being able to say no to the many solicitations that come past our way. For some spending is a way to make oneself feel good - for others, they never have been taught how to care for their money in the first place.

"Why should I care about something I do not have?" that's precisely the point! Unless you keep tabs on the little money you have it will never grow. So I am going to spring on you another dirty word: budget. "Oh, no I hear." Well, you are budgeting all the time without knowing it.

For instance if you have an apple pie with 5 people around the table you may divide the pie first in half, and in turn each half into 3 pieces giving you a total of 6 pieces. Why 6 pieces instead of 5? That's budgeting in action. First it is much easier to divide a pie into an even number of slices. Second a latecomer may show up or you may want to offer your guests a second helping.

And that's my point right there. Don't just fly by the seat of your pants but set aside some extra for a rainy day. There are two ways to do a budget:

The static budget is to look at last year's figures, bump everything by 20% and hope for the best. That is obviously a cop-out. An improvement would be to tally all your expenses and prioritize them by order of importance. Obviously if you are faced with an empty bank account way before your next pay comes in then something has to give.

Can you go cold turkey on cigarettes, alcohol, new clothes, electronic gadgets or movies? Your lifestyle and your finances are inexorably linked. Setting goals and monitoring them might be the way to get you out of that hole.

The dynamic budget is a tool that Wise Accounts offers. It takes into account all your recurring transactions with the periods at which they come due. Wise Accounts then goes away and produces a cash flow forecast as a report or a graph to show you whether you are heading up or down with your bank balance 3 months, 6 months, 12 months from now.

Now get to work and start tweaking those expenses, run the report again and see the impact of a seemingly small change over time... you will be impressed! That will give you the motivation to hold your course through what may come. Because you have your mind set on some agreed outcome in the foreseeable future you have gained the justification and the resolve to stick to your plan. You know that the result is well worth it.

For the accounting profession there must be checks and balances to make sure people can't fudge the books. For the business proprietor the ability to correct mistakes and re-allocate monies to their proper accounts is paramount.

Wise Accounts takes the view that it is your money that you are accounting for and that you should have the freedom to revamp things the way you want them to look.

Sometimes it is not obvious to figure out the perfect chart of accounts to suit your business until you are 3 or 6 months down into the financial year. Does it mean you should make your ledger unintelligible by having rafts of correcting entries just to show a proper audit trail? Hogwash! Let the bean counters muck around with their arcane arts - while you the business owner only want to get things straight.

Besides as history has shown time and time again - if people want to cheat - it's not a bullet-proof accounting package that is going to keep them on the straight and narrow.

So there you have it - two incompatible requirements. The accountant on one hand wants to safeguard his expertise and show things the way the Tax Office wants to see them. You, the business proprietor on the other hand who wants a clear dashboard of where things are going and how fast...

That conflict of interest has many ramifications. The way you account for a business reflects your bias about that business. As a business owner you should not let someone else bully you on the way you want to look at your own figures for goodness sake!

Some tax rulings about depreciation are quite devoid of the reality of market resale value. You end-up carrying two sets of books. One to keep the taxman and the accountant happy and another to reflect to yourself and your trusted shareholders about the real value of the business as it stands.

With Wise Accounts you can do your own thing all year around and let the accountant reload it into MYOB to perform their accounting magic at year end. Everybody is happy!