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 we’ve defined the important stuff, let’s get started!
𝟭. 𝗞𝗲𝗲𝗽 𝘆𝗼𝘂𝗿 𝗲𝘆𝗲𝘀 𝗼𝗻 𝘁𝗵𝗲 𝗺𝗼𝗻𝗲𝘆 – 𝘀𝘁𝗮𝗿𝘁 𝘁𝗿𝗮𝗰𝗸𝗶𝗻𝗴
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 you’ve spent on a project
- Your business expenses (have those receipts with you!)
- All payments you’ve made
- All payments you’ve 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 haven’t already. Online banking apps such as Monzo (www.monzo.com) are a great way to keep a record of this. If you’re brave enough to leave your notifications on, they will send you alerts when money has been put in and out of your account. They’ll also loudly announce how much you’ve spent in the day.
𝟮. 𝗦𝗲𝘁 𝗮𝘀𝗶𝗱𝗲 𝘀𝗼𝗺𝗲 𝗺𝗼𝗻𝗲𝘆 𝗳𝗼𝗿 𝘆𝗼𝘂𝗿 𝘁𝗮𝘅𝗲𝘀
Setting money aside for your taxes alone can making money management a little easier. If you’ve 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).
𝟯. 𝗖𝗿𝗲𝗮𝘁𝗲 𝗮 𝗯𝘂𝗱𝗴𝗲𝘁
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. She’s 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. You’ll know how much you expect your clients. You can also identify late payments which you can chase your clients (and don’t be shy about it either).
