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Being a work at home mom is hard enough, but keeping on top of your income and expenses for home working can become stressful if you’re not on top of it. That’s why it’s so helpful for work at home moms to have a system in place to keep track of income and expenditure.
Knowing exactly where your money is coming from and going to each month is essential to keep your home working financially successful. This applies to anyone working from home or running a home business!
Why Track Income & Expenses?
So you don’t miss a payout
It can be easy when working from home to have lots of projects on the go and once, and you’ll probably already have experienced delays in invoices being paid, or even not being paid at all! If you aren’t on top of tracking your income, you may not realize when payments haven’t been on time, or for incorrect amounts. It’s best not to rely on other companies to make sure you’re getting paid, you need to make sure you’re keeping track and you know where your money is.
Also read: 5 simple time management tips for WAHMs
To set a monthly budget for your business
No matter how you earn money, the goal for every work at home mom is to make more profit than you spend. You don’t want to be running a business that earns you $50/month while you are spending $100+/month maintaining it.
Of course, this may not be the case in the beginning stages of setting up a new business, but as time goes on you’ll be wanting the earnign to spending ratio to lean more towards profits than spending!
Tracking your finances enables you to see exactly how much money is coming in and going out. This means you can create a budget that helps you from spending more than you earn, and inspire you to be creative and find ways to keep the running costs down and profits higher.
To reinvest in your business
As your business grows, or your monthly income starts to increase, you may want to start increasing your expenses to scale up, or make things more cost effective. When you’re tracking your finances effectively, you can see your growth which helps you to work out when is a good time to invest in things, such as outsourcing or new equipment.
To make tax time easier
Self-employment taxes can be a nightmare if you aren’t properly tracking your income and expenses. It’s really hard to tell the IRS what you made and what your business spent without the information handy. Tracking throughout the year gives you these details, ready to hand over to your accountant or to put into your preferred tax preparation software.
Taxes can be an absolute nightmare when you’re self employed! Even more so if you haven’t been properly tracking your income and expenditure. After all, it’s hard to tell the IRS what you’ve made in income and paid out for expenses if you haven’t got a good record of that information to hand. Keeping that financial record throughout the year means you have all the info you need, ready to fill in your taxes, or hand over to your accountant.
Use Google Sheets to help
Speadsheets are amazing for helping work at home moms track their income and expenses. It’s easy to input all your figures and use simple formulas to calculate everything you need to know. It’s a great way to keep track of how much money you’re making and spending each month, as well of giving a good overview of how your business is doing financially.
With Google Sheets, you can easily access your income and expense spreadsheets from anywhere you’re connected to the internet. You just sign up using your Google account and it saves everything to the Google drive for your account, rather than a specific device.
This means that even if anything happens to your device, you can still gain access to all your files. Best of all, it’s completely free! You can even download the Google Sheets mobile app so you can track your finances on the go.
Pro tip: Learn more about using Google Sheets by on YouTube. There are some great formulas you can put in that will calculate monthly totals and progress for you. You can even use it to create useful graphs and pie charts to show visual representations of your income and outgoings.
Schedule some time to check your incoming and outgoing payments at least once a week. It’s helpful to do it daily, but if you’re short on time, once a week will work. A lot of work at home moms have multiple income streams, so you want to make sure everything is properly tracked.
It’s also helpful to note down when each income source will pay or when invoices are due. If you have any type of planner or content calendar, whether digital or physical, make a note of those days and check up on it when your payouts are due.
A lot of programs typically pay once a month, so these will be easy to remember. Other platforms will pay within a day or so of you making a sale. These kinds of payments are where daily tracking of income becomes so important.
Each month you can go back and look over your bank and PayPal accounts to make sure you have tracked all your income accurately. Don’t leave it any longer than that, or you may miss the payment window and be in danger of not getting paid at all!
Anything you spend out on your business can be labelled an expense, so you want to be sure you are tracking these payments just as much as your income. Always keep hold of your receipts too! You’ll be happy you tracked your outgoings as well as income when tax season rolls around!
To keep things clear and simple, it’s best to keep a separate spreadsheet for expenses, so you don’t accidentally get the two mixed and input spending as income or vice versa.
Use common categories to keep expenses organized and easy to comprehend. For example, people who make money blogging might include categories such as hosting, virtual assistance, design tools and so on.
Those who sell on Etsy might include categories such as craft materials. If your business is run online, you may be able to include some of your internet service bill as an expense.
Important: Keep each and every receipt for things you buy for your business. These will prove invaluable as you file your taxes each year. Plus, it’s good to have a physical or digital record of your expenses when possible for personal reference and reflection.
The sooner you start keeping track of income and expenses as a work at home mom, the better, so get those spreadsheets started! Keeping organized and on top of finances will help keep your business and work finances running smoothly.