You might think that as a first time mum, bookkeeping has little to do with your life. But you’d be surprised how a few simple tactics borrowed from the finance and business world can help you keep track of all the extra expenses that come with new babies and growing toddlers.
Track Your Expenses
This is what bookkeeping is all about at its heart: knowing what’s coming in and how it balances against what’s going out.
When you get into the habit of regularly tracking what you’re spending you instantly know whether you can afford to splurge a little or need to rein it in till payday.
If you’re a bit old school (and there’s nothing wrong with that), try jotting down what you spend in a notebook. Just draw four columns on each page and title the first three:
● The date
● Item bought
● Amount spent
In the fourth column, put your current bank balance at the top, then subtract from this the amount of each item you buy. Remember to also subtract any standing orders or direct debits from this column to keep the amount correct.
It only takes a moment to jot down the amount spent on the fly, then you can fill in the rest when you have more time. If you don’t have a minute to write the amount in your book straight away, save the receipt so you can do it later.
You can do the same with an Excel spreadsheet, or if you have more complex family finances to take care of, online accounting services are a more professional approach — especially if you submit a tax return each year.
Keep Your Receipts
Not only do they provide a record of what you bought and where from, they also help you not to miss any transactions through the month. Unless you’re running a business, you don’t need to keep them once they’re noted in your finances ledger (except when the receipt is your proof of purchase for returns or warranties).
For those with more complicated finances, such as income from investments, business interests or inheritances, stocks or bonds etc., receipts and invoices form part of your paper documentary evidence. If the income from these affects your tax bill you would probably benefit from professional services. An accountant or professional bookkeeper can give more in-depth advice on your more complex
finance matters. Even if you do hire an accountant or bookkeeper, it’s still a good idea to track daily expenses.
How to Use the Records You’ve Created
Your expenses and income record isn’t just an empty exercise. It can give you all kinds of insights into your personal spending habits and can help you save for bigger purchases or luxury items like family holidays.
Every month, go through all your transactions looking for things in particular. An example might be eating out. How much did you spend on restaurants, cafes, or take-away coffees? The amount might be surprising. Then look how much you’re spending on groceries and see if that’s as you expected or if it was more. Don’t forget top-up shopping trips as well as the main shop each week.
Once you have a view of the bigger picture, you can work out exactly how much you could save by cutting down on one or two items, or by finding cheaper alternatives.
After a while, tracking money becomes automatic and can even be fun. It can also reduce money worries because you know where you stand all the time. It’s lovely when you can indulge the little ones in your life without worrying how the cost will affect the rest of your budget.