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The Importance of Financial History - Tools vs PrivacySubmitted by Townsend Asset Management Corp. on August 15th, 2016
Two misconceptions often made about accounting are: you have to be good with numbers and accounting is the same as finance. Accounting is less about math and more about logically applying rules and procedures. As far as accounting being synonymous with finance, although many principles are shared between the two disciplines, there is a key difference. Accounting mostly looks back at past financial patterns or offers a current snapshot of financial status, whereas finance analyzes assumptions made in the present, and projects what can come about in the future. What they both have in common is the analysis of historical data to get a baseline.
Whether engaging in accounting or finance, to effectively manage our resources requires us to preserve and keep track of our financial history. This begs the question, “How can we monitor and maintain all this valuable information?” Luckily, in this technological age there are many free platforms such as “mint.com” which can aid in tracking our current net worth, credit score, spending, debt, investments, and put it all in one place for us to see. The problem with this “free” service is that there is data mining on any information that has been entered into the program.
Data mining is the process of gathering information to build profiles on individuals. In most cases this allows the service to advertise products that might appeal to the users of the program. Though not necessarily negative, it does come at the price of having purchases and financial choices being broadcast to marketing firms. This is why there has been a trend with some financial firms now offering their clients proprietary portals that allow the same (and in many cases greater) services to track their financial history.
Here at Townsend Asset Management, we provide our clients access to a proprietary financial planning platform immune from data mining. Systems like the one offered at Townsend allow our clients to look at the big picture of what their money is currently doing, how it can be better working for them, and how they can be managing/reducing debt more effectively.
In order to remain financially reactive and better understand our financial weaknesses, it is vitally important for us all to utilize these remarkable tools.
Michael Solomon is a Tax and Financial Advisor at Townsend Asset Management Corp., a registered investment advisory firm offering comprehensive wealth management expertise to its clients. Email Michael@AssetMgr.com for information about financial and tax planning services.