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Keeping Track of Your Expenses
Knowing where you spend your money is important for every person and thousands of books have been written about the best way to spend your money – normally on appreciating assets like houses, shares etc We’re not going to write another course about “investing” your money but instead focus on how you can track your expenses as a new or startup business owner. The goal here is simple financial education and to help new independent contractors, freelancers and consultants to understand where their money is going, how to measure their financial performance and how to understand financial reports and make decisions based on them.
Source Documentation – Bank Statements
The usual source of all financial information is your bank statement but that doesn’t help if most of your expenses are paid for using cash – in that case you need to keep your receipts! We recommend that you setup a debit bank account so you can use a credit/debit card for small transactions and have them all noted on your monthly bank statement. If you use one bank statement for both personal and business transactions then your first task will be to separate the two.
Income & Expense Categories
These categories enable you to identify how much money you spend on rent, travel, advertising, internet and mobile phones for example. If you notice that a particular expense is too high you can work on a strategy to reduce that expense and give yourself more profit.
Sometimes it’s OK to spend more on advertising for a short time to build awareness of your brand, knowing that these costs will come down after 3-4 months and keeping a monthly record of these totals will help you see very clearly if you are sticking to your plan.
Reports and analytics are simply methods of representing statistical information about your transaction activity. Analytical tools are used everywhere to measure your performance and reveal important information in things like:
- visitors to your website,
- sales performance and of course
- your financial situation.
A major purpose of our Expense Management Spreadsheet and course is to introduce the concepts and terms that are used in financial reporting and help you stay on track with your strategies to reach your goals.