Introduction
Whether you're looking to make freelancing your full-time job or just supplement a 9-to-5 income, knowing how much you're earning is a key component of success. Some freelancers prefer to keep it super simple by just tracking their income in dollars and cents. Others prefer to get more granular with their reporting by separating out revenue streams, categorizing each project, and even creating detailed budgets for future projects—or all of the above! Regardless of which approach works best for you, here are some tips for effectively tracking your freelance earnings:
Self-Reporting
Self-reporting is one of the easiest ways to track your income. There are many different methods, but I'll show you how I do it with a spreadsheet and Wave.
The first step is getting your self-reported data into a spreadsheet that can be easily accessed from anywhere, so I recommend Google Sheets or Microsoft Excel (or even Apple Numbers). You can use any tool that works for you; this article will focus on Google Sheets because it's free, easy to learn and use, and has all kinds of cool features like charts and graphs built right in!
Once your data is securely stored in an accessible place like Google Drive or Dropbox, pick an appropriate time period--say 30 days--and enter all earnings from freelancing jobs into column A. If there were multiple payments made within those 30 days (like invoices), then separate them out into columns B through E respectively so that everything remains organized when looking back later on down the road at results over longer periods such as one year or five years' worth of work done during this same period each year since starting out as a full-time freelancer back in 2014.*
Be Honest
The first step to effective freelance income reporting is honesty. You need to be honest with yourself about your earnings, the time you spent on each project and your expenses. If a client pays you $100 for a project that took two hours of work, but they hired you because they thought it would take four hours and then they didn't give feedback or direction until after the deadline had passed (and still paid on time), then there's nothing wrong with reporting $50 in earnings for this particular job.
If we look at our example above where one client paid me $1 per hour while another paid me $10 per hour: I know that if I'm going to be able to pay my bills with freelance work alone then I need around $60 per hour in order for my business model to work out financially--this means that even though both clients were happy overall with their results from working together with me as their consultant/writer/editor/etc., only one of them was actually making money off those projects since we agreed upon different rates beforehand; therefore when calculating how much money I made during those two weeks (which equaled out at around $1k total), only half came from actual paying customers while half came from freebies like blog posts or articles posted online without any compensation whatsoever since these companies weren't paying anything upfront either...but hey! At least no one lost anything either :)
Be Realistic
The first step to making a realistic income report is to be honest with yourself. If you're not a skilled designer, don't try to sell yourself as one; if your main strength is writing, don't try to convince people that your photos are award-worthy.
Once you've decided what type of work makes sense for your skill set and interests, think about how much time each project will take. Estimate how many hours per week or month it will take for each type of work--and then double it! You'll probably spend more time than expected on any given project (I know I do).
Finally, estimate what kind of pay rate is appropriate for the amount of effort involved in each assignment--and then triple it! Freelance rates vary widely based on location and industry; if someone wants $10/hr from me when I live somewhere where $15/hr is considered low-end market value for similar work done by other freelancers who have been working locally for years (or decades), then I'm going elsewhere
Be Consistent
- Keep your reporting consistent.
- Use the same format to report your income.
- Use the same categories to report your income.
- Use the same method of reporting your income, whether that be in an Excel spreadsheet or a Google Sheet (or whatever else).
You can track your earnings and income, both in a general sense and by project.
You can track your earnings and income, both in a general sense and by project. If you are working on multiple projects at once, it's helpful to know how much money each one is bringing in. You may also want to keep track of how much money you make per client or month.
There are many ways to do this:
- You can keep track of your freelance income by month or year (or both). This will give you an idea of how much work has flowed in from which sources over time, which can help identify trends that affect future earnings potentials for those sources (e.g., if one particular client consistently pays late).
- Alternatively, if working with several clients at once but want more granular data than just "monthly sum," then breaking down income by category might be more useful; for example: "freelance."
Conclusion
You can track your earnings and income, both in a general sense and by project. Tracking your earnings is a good way to stay on top of how much money you're making as a freelancer, but it's also important to pay attention to trends over time and make sure that your expectations are realistic for each project type or client type.
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