We’ve learned a lot of things this year, but one really important lesson is our ability to manage our business’s funds while the times are good so when things go haywire, we’re OK. While there are a lot of components that make up a great financial plan, using a spending log can be a powerful tool to help keep your business on a budget.
What is a Spending Log?
A spending log is also often referred to as an expense tracker in the business world. When we track our spending, we keep a daily record of everything we’ve spent so we know where our money is going. And, more importantly, where we should be spending less money!
Knowing what you’re spending and why you’re spending it is crucial for the financial health of your business. If you spend more money than you make or more money than you should, you risk not being financially stable enough to continue doing business.
How Can a Spending Log Help?
1. Prepares You For Tax Season
Let’s be honest, when it comes to your taxes you need to know what you’ve spent. You also need to keep any receipts on hand so they can be easily accessed if you have to go through an audit.
A spending log is a great way to ensure that this is done properly. Instead of scrambling come tax time, you’ll be prepared and ready to submit what you need to your accountant. It’ll save a ton of time in the long run!
2. Learn to Manage Money Better
Learning to manage money is a process, but keeping a spending log can help you with that. It’s a lot easier to learn how to manage your money if you know what you’re spending.
There’s a lot of value in manually updating and checking your spending log. Even if you use a program to help, reviewing everything can be incredibly valuable in learning your spending habits and pinpointing exactly where your money is going.
In the long run, this can help ensure that you better grow your money knowledge. Who doesn’t want that?
3. Understand What You’re Spending Where
Understanding what I’m spending and on what is probably the most important reason that I keep a spending long for my business.
There is nothing more important when it comes to cutting costs and improving your overall cash flow. Yes, you can and should be acquiring new clients to bring up in more money but with more money and poor cash management, you’ll end up still having cash flow issues.
With a spending log, I can see what I spend on everything from marketing to client management. It also helps make sure that I’m aware of old subscriptions that haven’t been cancelled or fees that have gone up.
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