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As a busy mum, probably the last thing on your mind is bookkeeping. Taking just a few minutes each week though, and balancing your household finances, can bring incredible peace of mind because you know exactly where you stand with money.
If it all sound like a huge headache, here are some tips to make it a quick and easy process.
Make it Simple
You don’t need professional, expensive accounting software. When you’re just monitoring household spending, savings and income, all you need is one of the following:
● A notebook where you can make a couple of columns for income and expenses.
● A printed accounts book you can buy on the high street.
● An excel worksheet.
● An online accounting subscription if you want to delve a bit deeper.
The aim is to record all your outgoings and expenses, and balance these against what’s coming in.
Understand How Your Money Flows In and Out
Print off your latest bank statement covering at least a full month of transactions. Look for regular payments and make sure you know what each one is for. It’s surprising how small direct debits can remain active even when you don’t need them anymore. Product insurances are a prime example. Because it’s just a couple of pounds each month, these can stay active long after you’ve replaced the product itself.
Cancel any payments you no longer need, and write down all the others in your ‘banking expenses’ column. If you pay cash for some things, treat it like petty cash in a business and make a note when you take money out of the bank to pay for small daily purchases. Have a separate section in your accounts where you write down everything you spend your petty cash on, from cups of coffee to kids’ pocket money. Hang onto all the receipts until you’ve transferred the information into your books.
After just a few weeks of doing this, you’ll quickly see where your money is going, and get the bigger picture of how household finances operate.
When Professionals May Help
Very simple household budgeting, when you earn from employment and pay standard bills, is relatively simple and you can easily do it yourself.
If you’re also running a small business from home, or you have income from other sources (investments, dividends, property, inheritances), things might be a bit more complicated. Your home business, for instance, may entitle you to claim a percentage of household bills against your tax liability.
A bookkeeper can help you set up a system, and will happily work for a few hours each week to update and monitor your accounts. If you submit a tax return, an accountant will take the books prepared by the bookkeeper (or those kept by yourself) and make sure everything is in order and you’re claiming all you’re entitled too.
Make it a Habit
Like everything, it takes some repetition before keeping track of expenses becomes second nature. Especially at first, set aside an hour or so each week to sit down with your chosen bookkeeping method and bring everything up to date. Carry a notebook with you every day to jot down purchases and amounts, ready to transfer into your main books.
Don’t rush it, or let yourself get overwhelmed. If you’ve never done this before, it can seem like an almighty jumble to start with. Take it slowly and methodically, maybe just defining your columns one day, then adding a few items from your bank statement the next. Pretty soon, it will fall into place and your mental image of how your finances work will become much clearer.
When this happens, the satisfaction is huge. You can see where you could save a bit, ward off unexpected expenses because you won’t forget they’re approaching, and know that you’re in control, not your money.