Take Charge of Your Financial Life!

Financial planners stress the importance of having a plan. Here is how to pull one together and make it work for you!


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Working at home means taking control of your financial life, especially if you're freelancing. To make that control effective, you will need a basic accounting system. Tracking your money, whether it's going in or out, is basic to control. You can't be in control of your money if you don't know where it comes from and where it's going!

Few people enter the workforce expecting to work from home, but more and more of us are doing exactly that. One study found that, as of 2015, 37% of US workers were telecommuting.[1] A separate study places that number at 45%.[2] A 2014 study found that freelancers of all stripes make up 34% of the American workforce, a number that is expected to explode upward to 50% of the working population.[3] No matter how you measure it, the American workforce is changing, and that change presents challenges. One of the more complicated challenges for many at-home workers is accounting.

One of the key perks of the traditional in-office 9-to-5 job setting has always been structure. That includes not having to worry about organizing your client-side accounting. You go to the office; the accounting department takes care of the details large and small, and you eventually receive your check and, at the end of each year, your W-2s. You're responsible for reporting hours, but in most structured businesses the heavy lifting is taken care of by someone else.

For the self-employed and those who work from home, this is often an unavailable luxury. That can be a problem because most of us graduated without much financial literacy at all. One World Bank survey on financial literacy across the world produced some rather dismal results for Americans.

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When it comes to our finances, only 57% of us know what we're doing.[4] That's a troubling statistic for most people and a dangerous trend for anyone working from home.

Get Accounting in Order

The bare bones necessities for anyone who works from home involve handling the basics of accounting. Start with three key areas:

• Keeping track of how much is coming in, and from where.
• Keeping track of how much is going out, and to where.
• Keep track of how much is getting saved or invested, and where.

This information is not just valuable for tax purposes. Keeping track of your money is important for keeping your schedule, helping find overall balance in your life between work and relaxation, and planning for your financial future. Ideally, you'd be able to generate a comprehensive personal financial statement at any time of your choice. When you reach that stage, you've achieved full control of your finances!

Let's break down the importance of each area.

Keeping Track of Income

As a general concept, the money you have coming in and going out is called cash flow. You'll want to have a positive cash flow, but if you are not keeping an active track of your income, it's almost impossible to know whether you have that or not.

Keep track of how much you have coming in for different periods. Accounting is not just a monthly or even a yearly process: you need to take it down to the daily level. Keep track of how much you earn daily, weekly, monthly, quarterly and yearly. Each goal has a place in your short term and long term plan. Careful record keeping will show you whether or not you're meeting goals, and provide you with the data you need to determine what you can do to increase your cash flow. Most important, it will help you see trouble signs in your cash flow before they become a problem.

Know how much you need to have coming in. You should spend some time to figure out exactly what amount you need to have at the end of each month. Break this down and set daily and weekly goals, as well as goal averages. This way, when you're keeping track of your income, you can know whether or not you are meeting your goals and earning a cash flow that makes sense for what you need to do.

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Know where your money comes from. It's extremely important to keep a record of the sources of your income, and how much comes from what source. Are there regular payments due to investments? Are there regular clients? How many individual projects or jobs do you have any given week? Even if it's a one-time job with a client you may never work with again, make sure it goes in the record.

Keeping Track of Outgoing Money

The money you have going out is just as important as the money you have coming in. While it's easy to believe a balance is important here, that's the furthest thing from the truth. Preferably, you want to have a net positive between your incoming and outgoing money, something that you can only determine with proper accounting methods.

Know where you're spending. One of the most important aspects of accounting is knowing where you have to spend your money, and how much you're going to have to spend. Keep track of monthly obligations, such as recurring bills. Make sure to account and plan for all necessary items in your budget. Then, determine where money is leaving toward areas of decreasing importance, which will help you determine whether you can cut out anything that is unnecessary, and how much of an impact that cut will make on creating a positive cash flow.

Keeping Track of Savings and Investments

Although less important than ensuring you have a positive cash flow, savings and investments are necessary for a purposeful and secure future. Once you've secured a positive cash flow, and you have ongoing accounting methods that keep track of your income, it's important to begin setting aside your monetary cushion. You can do this either by saving or by investing extra money and helping grow what you have. Keeping track of these savings is much easier to accomplish, but it is still important that you do know how much you have saved or invested.

Technology to the Rescue

There are popular software packages, both free and paid, that can help you keep track of your cash flow, savings, and investments. The following programs have all received rave reviews for their ease of use and features:

Mint.com - A free Intuit program for keeping track of everything from your budget to your credit card spending.

QuickBooks - A paid accounting software from Intuit, and one of the oldest and most common.

EveryDollar - Budgeting software from financial guru Dave Ramsey, with both a limited free and paid version.

Wave - Free accounting software with paid customer service.

FreshBooks - A cloud-based software covering all accounting aspects, including client payment tracking.

Excel - Microsoft Excel is one way to start the process. It's not the easiest to manage, but simply starting the process with a spreadsheet is a good way to get the basics down.

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Once you have chosen a tool and learned to use it, use it to practice generating monthly personal financial statements. Compare those statements from month to month. That helps you stay on top of your finances, and gives you a way to track your goals!

Keeping close track of your money is not easy, and even with the help of one of these software packages, you will have to develop a process and get used to following it. If you need professional advice, seek it out: in the long run, effective accounting can make the difference between a successful work-at-home career and a financial disaster. Getting it right is worth the time, effort, and money that it takes.