By C.K. MacLeod
If someone is paying you for writing or editing, you’re running a business. You’ll need to keep track of your income and expenses, not just for tax purposes, but so you can make smart and timely business decisions.
Recently, while reading Your Money or Your Life, by Vicki Robin and Joe Dominguez, I was reminded that you can’t change money behaviours that you can’t see. A confession: I’ve never been a fan of the painstaking exercise of tracking my money moves on spreadsheets and ledgers. That, to me, is about as fun as eating cooked spinach, and I’d rather be writing, anyway. Oh, I will do it, but with an awful lot of caterwauling.
Robin and Dominguez include several record-keeping charts in their 9-step program, and if you like creating spreadsheets, you’ll find these to be useful. But, there must be an easier way to keep track of the incoming and outgoing without manually entering data into a spreadsheet. And wouldn’t you know it? There is.
I use use two money-tracking apps: Wave for business income and expenses, and Mint for everything else. Both apps list financial transactions in one handy location, saving you from dreaded manual entry methods. They use algorithms to “guess” if a transaction is an income or expense, and assign, often accurately, a descriptive label, or "category" to each transaction. What's left for me to do? Check that each category has been correctly assigned, which is fine because it keeps my eyes on my expenses, and fun because it only takes a minute or two.
From there, I can generate instant reports, complete with coloured charts and graphs that help me to see my financial picture. In Wave, I can print an income and expenses report that’s useful at tax time, and in Mint, I can earmark transactions (such as bank interest deposits) that I'll need to report on at tax time.
I can also compare my income and expenses from previous months to discover patterns that need adjusting. For example, in Mint, I discovered what my three biggest spending categories were. When I signed up for a money-back credit card that issued decent money-back rewards for three spending categories, I immediately knew which categories to choose.
Both apps are free, computer and phone-friendly, and setting them up is easy. You’ll need to connect the apps to any bank accounts, PayPal accounts, and credit cards that you use.
Is it safe?
Mint is owned by Intuit, the creators of the popular online tax software TurboTax. Wave is Canadian-owned and follows Canadian privacy laws (which are pretty strict). To accept read-only information from bank accounts, these apps need to be PCI-compliant, and adhere to the gold-standard security measures required by banks.
You cannot access your money in any way with these apps. They’re mirror accounts that show you your financial status. They won’t give you, or anyone else, the ability to touch your money. As with any cloud-based software, it’s an excellent idea to create strong passwords that you can change frequently. Using a Password manager, such as LastPass, will help you do that without tearing your hair out.
Since using these apps, I have an up-to-the-minute understanding of my income and expenses, without the drudgery of collecting this information manually. And because I prefer to spend my time with words instead of numbers, that’s money in the bank.
Note: if you’re a Canadian, sign up for the Canadian version of Mint to get the benefit of Canadian privacy laws.
Image by Tax Credits