The freedom many freelancers have been able to experience can sometimes be daunting when it comes to dealing with the admin side of things.
Important aspects of the job, such as bookkeeping and money management, can be intimidating when you don’t know where to start.
So, the Wishu team has put together a brief guide on how to dip your toes in the bookkeeping world.
Bookkeeping focuses on the documentation of previous transactions for a business or a personal account. It centers on what is coming in and coming out of your account, and how much is spent monthly.
Now weโve defined the important stuff, letโs get started!
๐ญ. ๐๐ฒ๐ฒ๐ฝ ๐๐ผ๐๐ฟ ๐ฒ๐๐ฒ๐ ๐ผ๐ป ๐๐ต๐ฒ ๐บ๐ผ๐ป๐ฒ๐ – ๐๐๐ฎ๐ฟ๐ ๐๐ฟ๐ฎ๐ฐ๐ธ๐ถ๐ป๐ด
Firstly, take a look at how much you generate into your account monthly. Pay close attention to these numbers. Is the amount you make consistent? When identified, make note of how much comes out of your account and how much you have leftover. These patterns can include:
- How many hours youโve spent on a project
- Your business expenses (have those receipts with you!)
- All payments youโve made
- All payments youโve received
When making these analyses, you will be able to identify which are your hotter months and when things tend to cool off during the year. With this knowledge, you can figure out when is the right time to set money aside and when you can splash it out (responsibly, of course).
A great way to do this is setting up a seperate account for your invoices if you havenโt already. Online banking apps such as Monzo (www.monzo.com) are a great way to keep a record of this. If youโre brave enough to leave your notifications on, they will send you alerts when money has been put in and out of your account. Theyโll also loudly announce how much youโve spent in the day.
๐ฎ. ๐ฆ๐ฒ๐ ๐ฎ๐๐ถ๐ฑ๐ฒ ๐๐ผ๐บ๐ฒ ๐บ๐ผ๐ป๐ฒ๐ ๐ณ๐ผ๐ฟ ๐๐ผ๐๐ฟ ๐๐ฎ๐ ๐ฒ๐
Setting money aside for your taxes alone can making money management a little easier. If youโve been tracking your money for over a year, you can roughly estimate how much you need to pay. You can make an accurate guess with the help of this Income Tax Calculator (https://bit.ly/2wMcGFm).
๐ฏ. ๐๐ฟ๐ฒ๐ฎ๐๐ฒ ๐ฎ ๐ฏ๐๐ฑ๐ด๐ฒ๐
The 50/30/20 rule is a method that is highly recommended. It goes as followed:
- 50% on necessities
- 30% on wants
- 20% on savings
Using how much you input monthly, this calculator (https://bit.ly/2ynotdn) can help you figure out how much you wish to contribute to the three categories above.
You can also use the Emma (https://emma-app.com/) app to help you budget your monthly spending expenses. Sheโs the virtual money manager that will help you avoid going into overdrafts, discover useless subscriptions, and manage your money better.
Once you’re aware of the flow of your account, you’ll notice your inputs coming in quicker. Youโll know how much you expect your clients. You can also identify late payments which you can chase your clients (and donโt be shy about it either).
