Finances 101 should be a required class in high school. Many take Accounting 101, but not everyone. If everyone were required to take Finances 101, they would know that real wealth equals credits minus debits.
Accounts Payable & Accounts Receivable
Accountants understand the differences between accounts payable and accounts receivable. If a company does not understand, then it will go bankrupt. So, why don’t individuals really understand the difference? If you look up the origin of the word, Economics it refers to household budgets. The original economics was based on how a family would manage its bills. Something has led people to think that economics is only what bankers do.
What Are Credits?
And, that is part of the problem. The world relies too heavily on high level bankers. Individuals, businesses and governments need to understand how accounting works also. Individuals, businesses and governments all have credit scores. Knowing the difference between a good credit score and bad credit score can save you a lot of money. Do you know what a good credit score means?
We don’t want you to name the number that constitutes the good credit score in the eyes of the banks, but the purpose behind the good credit score. A good credit score means that you are creditworthy. You have a history of repaying your bills, on time. Credits are income, assets and accounts receivable. If your aunt gave you an IOU because you paid for her groceries, that IOU is a credit.
The financial professionals of companies like Quill Group understand that real wealth is about credit minus debits. They can help you optimize your credits and minimize your debits. The world financial situation would be better if everyone took a page from the Quill financial expert’s book.
What Are Debits?
Debits are food expenses, utility bills, credit card debt and mortgages. If your debts become too high, then you might go bankrupt. There are many types of bankruptcy, but each one can reduce your ability to get new loans, good jobs or housing.
Boosting Credit Scores
The global debt level has never been higher. It hits cities, states and nations. It has gotten to a point where credit reports are offering some relief. The credit reporting agencies will exclude certain negative information to boost FICO scores, according to the Wall Street Journal. Isn’t that good news? That could help individuals, businesses and governments improve their credit ratings.
Wealthy people understand accounting. They know that a financial balance requires them to maximize their credits and minimize their debits. Generally, you should not take on new debt unless you have a credit to pay for it. True wealth equals credits minus debits. Wise accountants and financial professionals can help individuals, companies and governments achieve the right financial balance. It takes prudent thought, financial planning and self-sacrifice. Wealth building takes time, but the benefits are truly amazing.