Individuals are not required by law to keep financial books and records (businesses are), but not doing this can be a costly mistake from a financial and tax perspective. Your bank account and credit card statements may be wrong and you may not discover this until it’s too late to make corrections. You may forget to pay a bill and hurt your credit score. You may have no clue about allocating income to saving and investing. Or you may overlook expenses that could provide some tax benefits. So keeping track of your personal finances makes sense.

Hire a Professional or Do It Yourself?

Recording your income and expenses isn’t a difficult task (you don’t need an accounting background or to be “good with numbers”), but it does take time and effort. How you do it depends on your personal preference. You can hire an expert to do it all, do it yourself or combine the two, using an expert to help you from time to time.

Option 1: Use an Expert

If you don’t have the time or believe that your time is worth more than what you’d pay someone else, you can engage professional help. But who, exactly? When people talk about getting a personal accountant, they often use the term loosely to refer to everyone from a bookkeeper to a CPA or tax preparer or even tax adviser. Select the professional who meets your needs:

Bookkeeper

This person may provide concierge services for your personal finances, including paying your bills, balancing your checkbook, and looking over your credit card statements. A bookkeeper may or may not have special training. A bookkeeper can obtain certification from the or complete online training to receive . The hourly rate for a bookkeeper depends on where you are, what services you seek, and what expertise the person offers, but the fee can be as low as $20 per hour in the United States and even lower for a bookkeeper overseas (e.g., ).

Accountant

This is a person who has training (and likely a college degree) in accounting and can handle bookkeeping chores. The hourly rate, which again depends on location, job description, and expertise, is about $35 per hour on average but can be considerably more.

Certified Public Accountant

This is an accountant (with a college degree and perhaps a master’s degree in accounting) who has received certification from the (AICPA). While a CPA can provide bookkeeping services, this professional may be too expensive for the task. Hourly fees for bookkeeping services can run $50 per hour and up. (Most CPAs don’t handle bookkeeping services personally but use an employee in their firm (e.g., a bookkeeper) for this task.)

Bookkeeper

For the tasks described at the beginning, a personal bookkeeper is what you’ll need. Most people do not use an accountant (only wealthy individuals can justify the cost of these tax pros). Your bookkeeper will schedule regular appointments (e.g., weekly, monthly) to input data and perform the tasks you want to be done. Bookkeeping may be done in person (your home or the bookkeeper’s office) or online. Either way, you’ll need to provide access to your bank accounts and credit card statements, so be sure to check the references carefully of anyone you want to engage.

Option 2: DIY

Gone are the days of keeping paper ledgers. Today, user-friendly software and cloud solutions are available for the average consumer, not just professionals. The leading options for personal finances are:

Quicken

This software helps you create a monthly budget and monitor your finances. For an added monthly cost you can use a bill-paying system to automate your payments so you’ll always be on time and pay the right amount.

Mint.com

This free cloud-based platform also lets you track your personal finances as well as pay your bills online. It syncs with your bank account to simplify your personal finances.

Option 3: Combine Your Efforts 

You can work with a bookkeeper to help you get started with your personal accounting. Look for someone knowledgeable in the software you plan to use. The bookkeeper can set up accounts (which operate like folders) that you place your information in. By creating accounts that resemble the same categories used for tax purposes, you simplify tax return preparation (whether you do this or you use a paid professional). 

The bookkeeper can also review your work periodically (e.g., quarterly) to make sure you’re recording your income and expenses properly and reconciling your bank statement correctly.

The Bottom Line

However, you decide to manage your personal accounting, be sure to separate this from accounting for any business you own. Build the cost of this accounting into your household budget.