Who wouldn’t want to earn more money as a freelance writer? Seems like a no-brainer, right?
Even though we all want to make more money with our writing, you’d be amazed at how many freelancers don’t track their freelance writing income regularly or know how much they really make. And I think they’re missing out!
Being a type-A individual (and reformed number cruncher), you could say it’s in my blood to track all things numbers – income included. This has been to my advantage and helped me to grow my freelance business from $0 to $4,000 per month inside of six months.
I’m currently on track to hit $6,000 for the first time this month!
If you need or want to increase yours too, here are three systems I’ve used to track my income, set goals and challenge myself to beat each month’s previous numbers. So far, my streak is unbroken! (I hope I didn’t just jinx myself!).
1. The Big Picture
One of the best things I did for my business was to start a PNL or “profit and loss” statement early on. I knew that come tax time, it’d be helpful to know how much income I made, my total expenses and the net income my business brought into my household.
I just organized my 2014 taxes and dropped them off to my accountant this week and I’m happy to say it did help. The process can be improved upon, of course (totaling up different categories of expenses, for example), but it did the job.
The front page of my PNL statement has a rolling total for the year of my gross income, expenses, net income, tithe, tax money I set aside and debt we’ve paid off (one of our financial goals this year is to pay off our last remaining debt, our second mortgage). Here’s what it looks like:
I then have individual pages for each month of the year. On a daily basis, I’ll add any income I’ve actually received, expenses I’ve paid out, etc. There are formulas set up to calculate the rolling total on a monthly basis as well, so I know at any given time where I’m at for the month.
This helps me to see the “health” of my business at any given time and whether or not I’m on track to hit my monthly goals. It also helps me to keep monthly expenses in check!
2. The Daily Accounting
Something I’ve started to do this year is to write down in my physical calendar how much work that I’ve completed each day in billable income. Whereas my spreadsheet tracks “actual income received,” I track my billable income or what work I’ve completed that day that I can invoice for, in my physical calendar after the day is done.
I then add it up for the week (and then the month) and am able to quickly see how my effort impacts my income. There are many things that I (or you) will do for your business that won’t be billable or have an immediate payoff – and that’s okay! The point is, that we need to have a balance between doing things that help us to make money now (today), with those that will have a future payoff (for tomorrow).
For example, it’s my goal to earn at least $6,000 per month gross from my freelance business. That equates to roughly $1,500 per week or $300 per day. Some days will be less than $300 and others more, so as long as my weekly or monthly average gets to where it needs to be, that’s okay.
3. The Public Accountability
I started writing income reports that I publish on my blog last summer. I was so encouraged by reading other people’s, that I thought writing my own would be a great way to “pay it forward.” Others might benefit from reading mine, as they too tried to build their businesses from scratch.
Writing income reports helps me to analyze my business based on what happened in the previous month. I get to sit down and see how it compared to the month before and take the time to interpret my expenses and whether or not what I spent money on was worth it or effective in growing my business.
I don’t know that I’ll do them forever, but for now it’s something that helps, rather than hurts. Knowing that other people are reading them for inspiration helps to drive me to do more or at least to do better (i.e. raise my rates).
Tracking your income is important. You might not need to use three separate systems like I do, but you should use at least one – and if you’re going to choose, I’d go with a PNL statement!
Using a PNL is a great way to see the health of your business at any given time, as well as keep clean records for tax purposes. Tracking billable income on a daily basis via your physical planner is a great way to measure your effort on any given day. Lastly, publishing income reports can be a great way to keep accountable to your goals (especially if people are reading them!) and challenge yourself to do better over time.
Do you currently track your income? If so, what’s the method that works best for you?
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