We met Gabrielle at Alt Summit this year and we love her unique, creative style! Ben visited with Gabrielle about keeping family finances on track. Read the full interview for Ben’s favorite bookkeeping tools, tips, and more.
Gab: First of all, since this is 101, let’s start with what’s the difference between an accountant and a bookkeeper?
Ben: Bookkeeping is a sub category of accounting. An accountant can do many things, and bookkeeping is one of those functions. Bookkeeping is primarily entering transactions into a system — a spreadsheet or accounting software, then reconciling the account, and categorizing each expense (like rent, groceries, etc.) in a way that provides good information. A bookkeeper is really a data entry pro.
Gab: So would you say that most families can handle their own bookkeeping?
Ben: Yes! For home and family, doing it yourself is best, because only YOU know all the details about your transactions — a bookkeeper can’t tell if the purchase you made at Walmart was for food or for toilet paper. At our firm, we do bookkeeping for families, but it’s very rare.
Gab: That’s good news! A task we don’t need to hire out. : ) So then, what would you say is the goal of bookkeeping? Or, why should someone do this? What are the primary benefits?
Ben: Well, obviously, many of us get by without doing it. But if you want to have and keep a budget, it’s essential.
Bookkeeping at it’s most basic is knowing how much you spent and what you spent it on. The primary benefit of bookkeeping is for your own personal use, so that you’re not going over budget, and so that you have control of your finances and are aware of what’s going on. As a secondary benefit, having your books in order can help with tax returns.
Gab: Got it. If someone is ready to tackle their bookkeeping how would you recommend they start?
Ben: First of all, find out what you are spending. How much did you spend eating out last month? I’ll bet you it’s way more than you think. Spend 5 minutes going through your bank activity and add up all the eating out — restaurants, Starbucks, everything. Do you feel good about that number? Most people say: No! I didn’t know I was spending that much! People are often surprised at what they actually spend their money on.
Then tackle your other categories. How much did you spend on clothes, groceries, insurance? Knowing what your’e spending is the pre-requisite for creating a budgeting.
Gab: Okay. So how often do you think bookkeeping should happen?
Ben: At least once a month. Preferably weekly. For my own personal bookkeeping, I do almost all my spending with a debit card so it’s all online (I hardly use cash). I look at my bank account activity online, then categorize each expense. It’s a matter of grouping like expenses.