Hi followers! Or should we say, visitors to the economy chief since I don’t have a Facebook page. Wait I do. I just found it. Nothing there right now. I will start to post in 2025. Give it like so that I know you are reading my blog post. That is the only way I know you guys are visiting my blog page. I don’t have a newsletter or allowing visitors to comment on my posts. Too much spam and I don’t have time to read all the comments and filter the ones that are legit and the ones that are not. So please go to my Facebook page and give it a thumbs up or like as a token of appreciation that this simple blog page of mine is helping you become a better and smarter consumer, investor, saver, etc.
Here is my Facebook page: https://www.facebook.com/TheEconomcyChief
Ok now onto my post
Accounting, accounting. I remember taking accounting back in my days in college. Yes, it is boring to some. I found it to be somewhat interesting. In my opinion, it was certainly easier than those econ courses I took with all those graphs and equations. Yes, economics is boring too. But it is the system we have here in the good old USA and the rest of the world. So we better learn it and learn the rules of the game. Learn to play the game. Otherwise you are done for.
In fact, learning to play the game is so important that I am teaching my kids how to play and win at this game. Playing in a fun way. Last weekend, m wife and two kids spent playing Monopoly for about four hours. I was the first one to go broke. Can you believe it. The Chief was taken out so soon. My son implemented a strategy that quickly took me out. He took us all out. That kid is going to do great things for sure. I can tell already. I will come back to this site when he becomes a billionaire and I will show him this. Your dad may not have been a billionaire back in my day, but I was a millionaire and for me that is good.
Ok. I don’t want to bore you all with all my family moments. You all are here to learn and to learn how to become rich or at least get yourself on that path so you don’t go paycheck to paycheck.
Android or Apple App
First things first. You need to get yourself an app for your phone. I don’t care if it is from Apple or Android. The key here is to get an app. You don’t have to spend any money on any app. There are some great ones there that are free as a beer.
Make sure the app has double entry. What is double entry? Double entry is an old accounting principle that basically it means that whatever you do to one thing it will impact another thing. Here, think of a two beer mugs. Mug A and Mug B. If you take beer from Mug A and pour it to Mug B then one will have less than the other. But one thing is for sure. The beer is not disappearing (unless I take it from Mug A to my mouth, then it’s gone). Well back to the double entry. You can see that the beer is liquid and it moves from one container (mugs) to another container. That is double entry in a nutshell. Easy right. Well, it does get somewhat complicated when you are dealing with other things like equipment, loans, investors, owners and so on. But for personal finance, it is rather simple.
What I want you all to start thinking about is accounting, accounting when you are thinking about your assets (businesses, investments, houses). This is the equation. Don’t have time to put a graphic here, you all can read:
Assets = Liabilities + Equity
That is accounting equation. This always has to balance. Think of the = as the middle of the two mugs. If you move liquid you have to balance it by either getting a loan or use your credit card to buy more beer (liabilities) or you put more money (equity). Ok. I am getting a bity technical here but I want to keep it simple without putting you all to sleep.
Get an app that does not simple track expenses. Make sure it affects other accounts (asset or liability or equity). This will help you get a clear picture of how money flows.
Here is the app I have been using on my Android phone for 15 years. It is free and I have changed phones like 5 times and the first thing I do is install this app. It also has a Window and Linux version so that you can export the data from your phone to the Android. Don’t try to use so many systems. Keep it simple. I recommend just using the phone app.
I found this one in the Android App store.
If you find another app. Just make sure it has accounting double entry. You can go to Youtube and type double entry accounting and you will see what I am talking about.
Assets
These are accounts for items that have value. Some examples: Cash in your pocket, your checking account, your investment account, your car, your house, etc. Anything that has value goes here. Now bankers and accountants like to break this into two. Short-term assets and long-term assets.
Short-Term Assets
Anything you can convert into cash within 12 months (1 year).
Long-Term Assets
Anything you can convert into cash after 12 months (over a year)
Then you have Liabilities. You all probably have lots of these. Not good! Specially if you are living on credit cards. Credit cards are the worse invention for people. They turn you into a slave. Unless you own stocks of these evil companies then you are on the right side and making tons of money from fools who live off credit cards. Well you get it. That is liability. Credit cards are bad liability. Student loans and mortgage (home) loans are good. To some degree.
Equity. Equity is the money you invest in yourself or business. Don’t want to get too much into this because like I said. I want you all to start thinking about double entry and keeping track of what you own (assets), what you owe (liabilities). That is your net worth. What you are really worth after you
Assets – Liabilities = Net Worth
What I own – What I owe = My Net Worth
Simple example.
You have $10k in your bank account, you $200k in your IRA and a house that would sell for $500k. These are your assets.
Then you have $200k in mortgage and $5k in credit card debt.
Your net worth is:
$710,000 – $205,000 = $505,000
The goal is to get your net worth, the right side of the equation to go up and up.
Again, find an app that has double entry and learn basic accounting. If you don’t, it is like driving a car without learning the basics of turning, accelerating, stopping, etc. You are living in the economy without understanding the rules of this game. Those who are ignorant of the rules are at the bottom. Where are you?
That is all.
God bless and don’t forget to go to my Facebook and give it a like. I don’t have anything there now but will start to post things that helped me and may help you.
Next article will be about Tesla. Boy, I made some good money with that stock. I will tell you all what I did with it.
Later!
The Chief.