You don't have to work in high finance, own your own business or have a job as a corporate controller to get some benefit out of practical accounting skills. No matter what your career path may be, and regardless of what profession you are in, having a firm grasp of financial literacy can help someone manage their personal accounts.
You may know how to balance your checkbook and transfer money between your bank accounts. However, expanding your accounting skills can open up new possibilities for financial security. You don't have to be an accountant to benefit from an accounting course. What are some possible benefits of taking an online class in accounting?
What can taking an online accounting class do for me?
James E. Lake has been working for the last two decades in finance, accounting and information technology. He's currently a senior vice president for one of the world's largest banks and was previously a financial analyst with American Express for four years. Prior to that he worked for J & A financial services in Hong Kong where he honed his skills in Chinese and expanded his knowledge of financial planning in an international setting. He has a Master's Degree in Business Administration from the Thunderbird School of Global Management, which has been educating leaders in business for more than six decades and has a worldwide reputation for excellence.
With that kind of a background, he may have some advice for anyone interested in a career in finance, business or accounting. But what about for people who have other career aspirations who simply want to improve their financial literacy? We recently talked to Lake and asked him that very question.
Understanding bills and making a personal budget
"Accounting helps you understand bills and look for the relevant details in an invoice. Where are the debits? Where are the credits? Were any mistakes made on the bill?" Lake said. He continued by saying some knowledge of accounting can help someone develop a plan for cash flow.
"Monitoring money in and money out is crucial to developing a budget. Whether at the personal level or in a business," he said.
Lake also said he sees many people struggle financially because they may want to create a budget and analyze their cash flow, but don't know where to start. "An accounting course can give you the tools needed to read and create spreadsheets so you can monitor money in and money out. It can also give you the language and the concepts related to cash flow. It can provide almost immediate practical information for anyone who has concerns about their finances."
Personal Experience: Benefits of Knowing How to Analyze Finances
Lake recalled his own personal experience and the benefits that his accounting knowledge provided:
"When I first got out of college, I thought I was making good money in my new job but I was often short when insurance or other bills came due. I was able to analyze this and see it was a cash flow problem, not an income problem. I created a budget and analyzed the timing of when my bills were due. By performing some simple analysis and creating a budget, I made my life much easier and far less stressful."
Attention to Detail
Finally, Lake said, "accounting encourages attention to detail and also helps you create a long-term financial plan. Attention to detail can make you less susceptible to making purchases that are not in your best interest. Paying attention to interest rates and late penalties, for instance, requires attention to detail. An accounting course can encourage such attention. I really can't think of a down side to having some accounting knowledge because an accounting class may allow you greater control of your own life and finances."
Controlling your Debt
The Federal Reserve reports that the United States, as of July 2014, has more than $3 trillion dollars in consumer debt. A lot of that amount is from credit card debt but it also includes car loans and student loans. If you have credit card payments, a car payment, rent, student loan repayments and other bills all due each month and you never seem to make ends meet, you may stand to benefit from developing a budget plan. At the very least, an online accounting class can give you some tools to do so. Ideally, however, a basic accounting education would provide you the skills to develop life-long financial security.
If you're interested in finding out more about ways you can pick up your basic accounting skills literacy, check out some of the listings below.
Interview with James E. Lake, senior vice president, September, 2014, conducted by Nick White
"Consumer Credit G. 19." The Federal Reserve. September 25, 2014. http://federalreserve.gov/releases/g19/current/default.htm