Accounting and Life Balance
As part of my preparation for graduate school work I am reviewing some basic accounting principles. For those of you who are familiar with the math of accounting, this equation is as natural to you as breathing:
Assets = Liabilities + Owner's Equity
While studying the various accounts that comprise each one of these elements, I was continually drawn back to the ideas of balance and pruning that are some of the most eagerly anticipated topics when I work with an audience. Just as in accounting, you can not credit (add to) another area without first debiting (taking away) from another area. Any choice that is made will require a "double entry" in your work or life's accounting (meaning that you can't just add something without taking something away somewhere else-everything has to remain balanced).
As I reviewed more about accounting I smiled even more when I read that most people are only familiar with single entry accounting (think checkbook). Similarly, most of us don't stop to think about how adding something to our schedule or commitments impacts the big picture (we do the single entry approach). Instead we should take the more accurate (and yes, complex) approach of making both a debit and a credit entry. What will adding this new commitment (debit) require me to reduce in other areas (credit) in order to stay balanced?
So today, take some time to think about how your choices are adding to your assets or increasing your liabilities-and yes, you are the owner looking to build equity. Who knows, it might even improve the look of your balance sheet or income report-a topic for another day.