Have you ever wished that the old saying “money doesn’t grow on trees” wasn’t true? A tree that grows money instead of leaves would be high on the wish list of many flatmates. While it’s not possible for you and your flatmates to grow your own money tree, your household can certainly create a system that lets you track flatmate expenses and help you pay your bills.
Establishing a record keeping system lets you manage the movement of money between all parties and helps you quickly find out when money has been collected, how it has been spent and if the bills have been paid. It also lets flatmates solve any disputes quickly.
So, how can you set up your own flatmate accounting system. You can create a simple and efficient system in 5 easy steps.
1. Decide On Your Bookkeeper
The main leaseholder is usually in charge of the bookkeeping. If more than one person is responsible for the lease your household will need to nominate a bookkeeper. The selected flatmate should have good numeracy skills as well as be responsible and reliable.
2. Invest In Accounting Supplies
You should use a notebook, Receipt Book, expanding file/wallet or documents wallets, a cash box and petty cash vouchers. If your household has a large number of expenses, you will need to use a larger file or packet of document wallets. These supplies can be found at an office supplies store.
3. Create Your Accounts Book
Your new notebook will be your Accounts Book. The first half of the book should be your Accounts Receivable section which shows the money given to the bookkeeper by flatmates for expenses while the second half should be the Accounts Payable section. This section shows the bills paid by the bookkeeper to billers like the landlord.
Each Accounts Receivable and Payable page should be divided into 6 columns. Your Accounts Receivable pages will need to be labelled with the column headings of date, flatmate name, description of expenses, amount owed, amount paid and receipt number. The Accounts Payable pages should have the headings of date, bill paid, amount owed, amount paid, method and receipt number.
4. Set Up Your Accounting Records
You should place your accounting paperwork, Receipt Book and Accounts Book in your expanding file or document wallets. Ideally, a separate wallet or filing space should be set aside for each type of expense and for unpaid bills. When you keep your paperwork in one place it will be easier to pay your bills on time.
5. Using your Cash Box
The money collected by the bookkeeper for expenses should be kept in the cash box. It’s important that this money is stored separately from the bookkeeper’s own money and petty cash so that the collected cash matches or “balances” with the amount of money written in the Accounts Book. This ensures the bookkeeper has collected and spent the right amount of money to pay the bills and no mistakes have been made during calculations.
This system requires your household to dedicate only a couple of hours each month to finances. When collecting expenses, the bookkeeper simply needs to update the Accounts Receivable section of the Accounts Book, put the money in the cash box and give each flatmate their receipt. After all the expenses have been collected, the cash has to be checked and matched against the amount written in the Accounts Book.
When paying bills, the bookkeeper will need to update the Account Payable section. In addition, as money is taken out of the cash box, a cash voucher has to be written out showing the amount taken and the bill paid. After all of the bills have been paid, the total amount of the cash vouchers will need to be matched against the amount shown in the Accounts Book.
By setting up and implementing this simple but effective accounting system your household can keep its finances on track. You’ll no longer need to worry about why money doesn’t grow on trees which gives you more free time to do the things you wish to do.