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Money Management for the Work-At-Home Mom
by: Wendy Wood

One of the most difficult aspects of working at home may very well be the money management. Even if you're making great money, many people find it difficult to make ends meet when there's not a weekly paycheck. Consider some of the problems that arise and why the work at home mom may feel that she's really not making any money at all.

When you're working for an employer who hands you a paycheck on a regular basis, you quickly learn to manage your money with that payday in mind. You know when the money is going to arrive, how much it's going to be, and you probably already know where the majority of it is going to be spent. If you have some bills coming due, you know without a doubt that there's gong to be a paycheck on a specific date to pay them.

When there's not a paycheck on a certain day, you may very well be starting to wonder how you can pay those bills on time. It's human nature to worry about money and the work at home mom is no exception. There are some common pitfalls that you can avoid if in your quest for good money management.

One of the most tempting things to do is to spend money as it arrives. Most work at home moms aren't fortunate enough to have a regular income arriving in the mailbox every week or two. Money comes in sporadically, and when it does arrive it may not be large amounts at a time. When those small payments do appear, avoid the temptation to spend them immediately. If it's not enough to pay bills that are coming due, put it aside until you have additional checks to meet those bills.

This is the same pitfall that waitresses face. Many people in the food service industry depend on tips as a major part of their income. They collect those tips every day and it's tempting to treat it as "extra" money. But when the paycheck arrives, it's seldom enough to pay bills and make ends meet until the next paycheck. So the cycle repeats.

If possible, send your checks directly to the bank. If not, pace yourself to save everything you make for at least a week (or two). Then cash or deposit everything at one time and take stock of your income as opposed to your bills and expenses.

Another tactic to use when it feels that you're not making any money is to keep a detailed list of what does come in. When you look back over that list, you may be surprised at how well you're doing - and it may be time to take stock of your money management practices.

There's nothing like receiving tax statements at the end of the year to make you realize how much (or how little) you made during the previous year. Most work at home moms won't get tax statements, or at least won't get a single tax statement, for the previous year. Your records will be the true statement of how well (or how badly) your business is doing.

Many people find that keeping the records is the most difficult part of money management for the home based business. You'll likely be paying taxes on your income so don't overlook the potential for deductions. Make an appointment with a tax professional early in the year to get a grip on what expenses will be deductible. If you have an office in your home, or if you're just using your home as a base of operations, you'll probably find that some household expenses are deductible. If Internet access is necessary for your business, you'll be able to deduct a part or all of that cost. In many cases, you'll be able to deduct a set amount for "renting" your office.

A good filing system is also an important part of good money management. You don't have to have a degree in bookkeeping to understand the need for keeping receipts and records of transactions.

If your business warrants it, you may find that it's in your best interest to set up a business account for your banking transactions. While it may seem an unnecessary step considering the amount of money that will be going through the account, it will help you keep more accurate records. Your bank statements can sometimes serve as proof of income. If you decide to take out a business loan, the fact that you've taken the initiative to set up a business account will look good to potential lenders.

One of the most important things about good money management for the work at home mom is simply to be proactive in the "management." If you're passive about keeping records, filing receipts and tracking your income and expenses, you may never feel that you're really making as much as you thought you could.

Good money management takes practice, patience and diligence. It's easy to get on with the work and ignore the need to track your income and expenses. But as the old saying goes, "it ain't over till the fat lady sings." With home based business, it's not complete until the paperwork and records are done.




 



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