Management of student finances

I didn't pay much of an attention to my personal finances, comings and goings of the money in my hand when I was a starting student – money was anyway a scarce resource then so there wasn't any sense on keeping strict records. I remembered most of the buying’s I made since there wasn´t many and the source of income was limited to only two: my employee and the monthly government grant for the students, which wasn't much. The salary came also once a month, and that wasn´t much either. The planning of the future finances or financial management (in Finnish = taloushallinto) of personal incomes was quite senseless since the situation would be the same for years ahead.

After few years however, when the professionalism grew and work opportunities started to come, the sources of the incomes started to be more numerous. Many students work as a free lancers or trainees on their future field of profession and I did the same – wrote articles, did some short term publicist work and so on. Money started to come in as well, and this needed more attention, especially when being on the government grant still. The government grants have conditions for other incomes – this is because by that way students are pushed to give effort on their studies instead of working. The issue is however quite complicated as my situation showed. I was working and learning on my field and getting money for it but if I didn't take strict care on my accounts and received more income that was allowed, the grant was claimed back, with high interest.

This can actually lead to the breaking off the studies, since the actual work, with added bonus of income is much more attractive than eke out a living on the government grant and all the time counting the money what comes in and possibly paying back the government money with the high interest from money hard earned. The level of financial management skills required from the students who are working on their spare time and who are receiving the study grant is far higher than can be expected even from their parents or the professors teaching them.

Festival management and finances: artist fees

The financial management of a festival is a complicated process since there are hundreds of different sources of incomes and hundreds of small payments to small companies, artists, stuff, technics and others. Also, many festival related payments feature special circumstances and methods of payments, which are not many times compatible with the accounting formulas of the accounting software’s (in Finnish = kirjanpito-ohjelma) and the ways of the accounting companies. Added to this, rules and regulations for taxation take very poorly into account the life of the artists or event managers and accountants.

Of course the easiest way for both parties is simple billing between them and this is what mostly happens – however, the thing which makes this a tricky question many times is that festival production needs many services already way before the actual event, but many times only a small share of the money needed to put up the whole thing is already there – the main finance being the quests who buy the tickets and use their money on the festival area. Many event give large efforts on their pre-sale just for this reason. And of course there is also the more convenient way of arranging the event when knowing approximately what size the audience is.

The artists give some headache with their payments sometimes. Most of the recording artists have a company through which they are billing their performance fees, or they have a manager who does the billing for them and then pays fees for the musicians. But in these days of do it yourself culture many artists have decided to handle these businesses (as many others as well such as the work of a record label) themselves, mainly to keep the share of a manager, PR, booking agency or any other middleman for themselves. In these cases you can come across with variety of ways of payments the most common being the paying of the fee in cash and getting a receipt on spot. This makes however very difficult to keep the records up to date during the event and since needs a precise handling on the accounts.

Double entry book-keeping explained by Pacioli

Double entry bookkeeping was first introduced by an Italian mathematician and a monk Luca Pacioli in his famous book Summa de arithmetical, geometria, proportioni et proportionalità. The book was published in 15th century and it described the method of accounting used by Venetian merchants of the time. Double entry book-keeping became the standard method of accounting (in Finnish = kirjanpito) very soon, and the Pacioli's book became a bestseller.

Double entry bookkeeping is a system where each transaction is recorded twice into the columns on the sheets of the ledgers. These columns were named debit and credit, the first being the left side column and the other one the right side column. The basic idea is to follow two different financial transactions: where the money has come from and where it has been spent. In double entry book-keeping the money spent is also the money which is staying in the company account for the time being as well.

All transactions must be recorded in the both columns and that serves as an check for any mistakes or errors, since the sum of total credits and total debits of different accounts must equal and if not, there is an errors. In case of this the debit and the credit can be traced back with the help of the marking of the date and identifying code which is usually attached to the record.

Double entry bookkeeping features two different kind of approaches to the accounting, named Traditional Approach and Accounting Equation Approach. In Traditional approach the accounts are divided into real, personal and nominal accounts. Accounting equation approach, which is also called American approach, transaction records are based on the equation Assets=Liabilities + Capital.

Accounting tools

In the old days the records on credits and debits were written by hand on actual physical account books and the whole process of accounting took a lot of working hours and work effort and was quite hard work which needed accuracy and precision with numbers and money transactions. However, what has happened to actual paper money or books for example, has happened to accounting too. These days almost all accounting and financial management is done digitally with the help of computers. Like money, bills, receipts, tax deductions and announcements all travel from sender to receiver on the digital routes via internet and they are archived in the endless corridors of some server space, maybe physically far away place from the actual owner of the archives.

Modern accounting tool can run as software on a computer of as a cloud service used via internet. If in the old days, before the whole information was turned into digital format, the person who actually did the markings to the actual physical accounts needed to be a bit of an expert in accounting, while modern day electronic accounting (in Finnish = sähköinen kirjanpito) system enable for example uploading the information to the system without actually having extensive knowledge on bookkeeping and accounting. The account books needed some space as well, while the records on some remote server doesn't claim space, only money which runs as well as a digital information in the web.

As with digitalizing the information usually is, the physical manifestation of the actions and information vanishes and becomes maybe only an emanation from the digital world's events, such as is a receipt from the actual money transaction, which is actually a numbers in digital format moving through internet connections from digital bank account to the other. Bookkeeping is not actually any more bookkeeping as such, writing the records into actual books.