Teenagers – Study Away From Home, Simple accounting records

Many teenagers today are studying away from home, locally or in other countries. How are they managing themselves financially? Are they able to budget and handle their money wisely? Many realize they are “BROKE” only when they get the “funds not available” flashed on the screen at the teller machines. Shocking but it is happening.

My son is organized and very thrifty in his ways of spending. However being one from the science stream, money management is not taught or a part of their curriculum. Hah! Some figures scribbled in his notebooks, some entries forgotten and most often, left wondering where all his money goes! 


Remember! that lump sums you get at the beginning of the term or year have to be spread out to last you till the next one. It is important that you start early learning basics of book-keeping. This help keep track;

• of your income (money coming in),
• spending & expenses (money going out) and
• your daily balances
• and allow you to come up with estimates or budget. 

Here are some tips on how to maintain a simple Cash or Petty Cash book

STAGE ONE

For beginners or those with no basic accounting background, practice using the simplest format – “Cash In” and “Cash Out” entries. You can get this pre-printed format Cash book (sample pic) from any bookstore. 


You may first want to familiarise these simple steps by making daily entries for 30days? From this simple record you are able to check;

• Details of each transaction (date, details and amount)
• Total cash received (total debits) and total cash spent (total credits)
• Total cash received less total cash spent = BALANCE

STAGE TWO

As you progress to your 2^nd month, (with increased daily entries) you may now want to know the breakdown of these sources of income and how these funds are being spent. 


Group entries into categories/headings and record each entry into the respective column for example;

1.

IN (Source of Income - Receipt)
Loan	Home	Job	Misc

(Add columns and headings according to your priorities)

2.

OUT (Spending & Expenses - Expenditure)
Fees	Rent	Transport	Com	Self	Misc	NOTES

(Add columns and headings according to your priorities)

3.     Now let us format the columns into a spreadsheet;

        S A M P L E

4.   Let us practice with some simple entries;

Use Windows Excel to format your spreadsheet and the formula tools available to (automatically) help with your calculations.  Go here and here and here for online basic Excel tutorials.

 

5.  Sometimes you may find balances in your Cash book and your Bank do not tally. You will need to keep additional records to reconcile these differences. However, generally these differences may be due to;

• Amounts/remittance made direct into your account that you are not aware of (‘+’ to your Cash book balance)
• Bank interests (‘+’ to your Cash book Balance)
• Bank charges (‘-‘ from your Cash book Balance)
• Withdrawals made that you forgot to record (‘-‘ from your Cash Book Balances)

 6.   You can get free simple Cashbook Templates downloads (Pre-set columns with basic headings and formulas/ computations) ready for use from the Internet, some sites allow you to modify to your requirements. Go here for more information. 

Some packages offer many other basic accounting records (forms and formats) that you will find very helpful for your future use.

STAGE THREE

ESTIMATES AND BUDGETS

Making a budget is the most important step in controlling your money. You can see how much money you expect to have for the month and plan for how much you can spend.

Let us assume you are now familiar with the basic recordings of your cash-petty cash entries. Close the cash-petty cash record at the end of the month (say 2months records). From these figures you are now able to come up with a simple estimate/ projection on your income and spending;

(SAMPLE)

ESTIMATED INCOME 

	DETAILS	TOTAL
1	AAA & Co sends every semester (6months)	10,000.00
2	January from your parents	1,200.00
3	Feb –Jun parents will give monthly allowance	1,000.00
4	From Mac 2011 you will start a part-time job (weekends) with a basic salary of $240.00 per month	240.00

ESTIMATED EXPENDITURE

	DETAILS	TOTAL
1	1st Semester Fees	7,000.00
2	Rent to Mr XY; (Payments in advance to Mr XY) Rental Deposit @ $350 Rental @6months = $350 x 6      = $2,100 Maintainance @$50  = $50 x 6    = $300 Water/Elect/Gas @$75 = $75 x 6 = $450	3,200.00
3	Transportation Petrol per week @$30 x 4weeks      = $120 Maintainance/repairs/Tol  approx = $30 per month	150.00
4	Communication Top-up @$30 x 4weeks = $120 Internet charges           = $30 per month	150.00
5	Self – clothes-wears/toiletries/medicines/sundries	150.00
6	Food – Breakfast $3, Lunch $6 Dinner $6 = $15 daily @$15 x 30days	450.00
7	Misc – Study materials & outings	100.00

Based on your estimates above let us record the figures into a worksheet and prepare a simple budget for the months of January 2011 to June 2011;

Budgeted income and expenditure

For the period January 2011 to June 2011

		TOTAL	JAN	FEB	MAC	APR	MAY	JUN
	INCOME
	Loan for AAA & Co	10000	10000
	Home Allowances	6200	1200	1000	1000	1000	1000	1000
	Job - Part time	960			240	240	240	240
	Misc
	TOTAL INCOME	17160	11200	1000	1240	1240	1240	1240
	EXPENDITURE
	Fees	7000	7000
	Rent	3200	3200
	Transport	900	150	150	150	150	150	150
	Communications	1200	200	200	200	200	200	200
	Self	900	150	150	150	150	150	150
	Food	2700	450	450	450	450	450	450
	Misc	600	100	100	100	100	100	100
	TOTAL EXPENDITURE	16500	11250	1050	1050	1050	1050	1050
	INCOME - EXPENDITURE	660	-50	-50	190	190	190	190

From this Budget you will be able to plan and monitor your spending accordingly;

• Strictly sticking to your Budget, you will notice a deficit in January and February by $50 each month. Adjust your spending - reduce where necessary.

• From March to June you will have excess $190. This is because you will be having income from working part-time. Will work take your time away from studies? If you decide to stop, which part of your unnecessary spendings should be reduced? 

 

Discuss your budget with your parents.