Advantage of keeping Accounts-Ready Money-Discount-Tradesmen's Books-Account Sheet-Expenses-Division of Expenditure-Precautions in paying and receiving Payment by Cheque-Receipts-Distinction between True and False Economy-Examples.
By accurate account-keeping it is easy to ascertain how the current expenses compare with the income. This includes the price of all purchases, what money has already been spent, how much there is in hand, whether there has been undue extravagance in any one branch, and where retrenchment may most effectually be made. Regular daily entries are essential to ensure accuracy. Many people commence a new book at the beginning of the year, and for a few days enter every payment most diligently, but soon defer the entries for a day or two. Then the exact details are forgotten, and either many things are entered as "sundries," or a trifle is added here and there to make the totals balance. It is needless to say such accounts are worthless.
In order that a housekeeper may plan her expenditure wisely, she should have a regular allowance paid weekly, monthly, or quarterly. The amount is sometimes proportioned to the number of individuals forming the household. For middle-class catering probably this sum varies from 8/6 to 10/6 per head per week. The rent is usually calculated to take up one-eighth of the total income, and the taxes to amount to one-third of the rent. A certain proportion should always be set aside for emergencies and unforeseen contingencies : fire insurance should be paid, also life insurance, and something should be saved, it being a most thriftless plan to live quite up to the yearly income.
The tradesmen's accounts should be paid weekly, and the small vouchers or weigh bills accompanying all goods should be kept to check the books by. Milk and bread should be entered daily in their respective books. This is called ready money, though not paid at the exact moment of purchase. Ready money paid for everything ensures the best articles at the lowest price, produces willingness to oblige on the part of the shopkeeper, and secures discount, which often is allowed on immediate payment to the amount of 5% or 1/- in the £1. Dr. Smiles said, "A man knows his actual position if he pays his way as he goes. He can keep within his means and so apportion his expenditure as to reserve a fund of savings against a time of need. He is always balanced up, and if he buys nothing but what he pays for in cash, he cannot fail to be on the credit side of his household accounts at the year's end." Emerson says, "To pay ready money is a great check on the imagination."
Where long-standing bills are in vogue small errors may easily pass unnoticed, which would have been discovered if ready money had been paid.
Every purchase should be carefully considered: much money may be frittered away on tempting trifles which have no real value.
The plan on p. 34 is a clear method of entering and balancing the household accounts.
This shows that on the quarter's expenditure a balance or saving of £3 4s. was effected on the allowance.
Accounts should be checked every quarter, when the cross cast of the quarterly and the cast of the weekly totals should agree.
A petty cash book should also be kept, in which details of repairs, renewals, and sundries can be entered, as it is not practicable to rule off spaces for everything in a household account book.
THE CURRENT EXPENSES of a household are always the most serious; under this head come rent, taxes, food, wages, coal, gas, education, and everything that has to do with the cleaning and keeping up of a home.