7 Reasons Why You Should Track Your Freelancing Income Daily

daily-income-trackingHow much did you earn today?

Can you even answer that question? Many freelancers cannot. They look at their income from time to time, but unless they’ve actually received a check that day they can’t answer the question without digging into their accounting records.

How much you earn as a freelancer is very important. It can determine whether you’re running a profitable business or losing money.

Unlike traditional employees who receive the same amount regularly, most freelancers receive irregular pay. Some weeks they earn more money than others. This can make keeping up with our earnings tricky.

Recently, I started tracking my income from day to day. It just takes a few minutes to do and I’ve discovered some surprising advantages to daily income tracking.

In this post, I’ll share seven of those advantages as well as some tips and tools to help you track your daily income.

Why Track Your Income Daily?

How much you earn ultimately determines your monthly, and annual income. For example, to earn an annual income of $48,000, you need to earn an average of $200 a day (based on 20 working days a month). Likewise, an annual income of $96,000 requires an average daily income of $400 a day.

There are some definite advantages to tracking your freelance income daily. Here are seven of them:

  1. Increases motivation. It’s encouraging when you realize you’ve exceeded your daily income goal. Likewise, if you are constantly falling short of your daily goals it can motivate you to do more work.
  2. Helps with budgeting. Knowing how much you earn each can help you understand how much you should spend and how much you should save.
  3. Improves scheduling. Keeping a constant eye on how much you’re earning each day tells you when your schedule is full. It can also make you aware of gaps in your schedule when you could take on more work.
  4. Backs up accounting records. While the sort of record I’m describing isn’t a replacement for traditional accounting methods, you should periodically compare it with your regular bookkeeping records.
  5. Increases accountability. If you know you have to record how much income you earn each day, you are less tempted to play hooky and more likely to keep working so that you have some income to record.
  6. Track progress towards a goal. If you set daily income goals for yourself, you will see whether you are falling short or exceeding your goal each day.
  7. Can help determine your rate. If you always fall short of your daily income goal even though you are working a full day, it can be a sign that your rates are too low.

How to Track Daily Income

The first decision you need to make about tracking daily income is whether you want to track the income as you earn it (my choice) or as you receive it. If you also plan to use the information in your budgeting process, wait until you actually receive income to track it.

For me, tracking daily income was simple. I simply added a column titled earnings to the spreadsheet I already use to schedule my freelancing projects. Since most of my freelance writing projects can be broken down into tasks that can be completed in a day or two, tracking daily income is fairly easy for me.

Freelancers who regularly work on larger projects that can’t easily be broken up by the day may wish to track their earned income weekly. They can also divide the total amount they will earn for the project by the number of days they work on it.

Important Note: Tracking income as described in this post is for informational and motivational purposes only. It should not replace keeping conventional bookkeeping records.

Tools to Help

As with many tasks, there’s an app to help with that. In this case, I found two iPhone apps that let you record income by calendar day:

  • Daily Income (free). The free version only allows you to record income 30 times, so if you do lots of small projects you’ll need the paid version (which is still relatively cheap). Both versions allow you to produce a monthly or an annual income report. The reports show your highest and lowest daily earnings as well as your average earnings.
  • Dollarbird. This is a calendar-based budgeting tool that keeps a running tab on how much money you have on hand. It’s a bit more complex than the Daily Income app. You will not only be tracking income, but also expenses. Since the idea is to always know how much you have on hand, you should track income when you receive it and not when you earn it.

Your Turn

Have you tried tracking your income each day? Have you found it helpful?

Share your thoughts and experiences in the comments.

Comments

  1. says

    Our time tracker: 88 Miles has built in daily income tracking. It automatically calculates you expected income based on the time you clock, and will send you a daily summary email. And there is a dashboard that will estimate how much you will make this month, and this year. Super easy.

  2. says

    Laura – great piece. While I don’t track my income daily, I do keep a white board in my office where I write down every time I invoice someone during the week. (I bill on a fixed project basis, so I invoice any time I hit a milestone.) I agree that it helps with motivation – I always feel great when I’ve invoiced in excess of my target amount for the week!

    I think there are some numbers a freelancer should always know: Their YTD income across all customers, AND a breakdown of income by client. I typically only have 4-6 active clients in a given year, so this isn’t hard for me, but obviously if you have a lot more this may be a bit tricky. But understanding where most of your income is coming from is important. One year I realized almost 70% of my income was coming from a single client! That was an important wake-up call to even things out a bit. I don’t want to be that dependent on any one client.

  3. says

    This is great! I never thought of tracking my freelance income. Although i think tracking my income will only add pressure to my everyday freelancing plans, maybe I should really start it. To gauge my productivity level.

  4. says

    A very well-timed post, Laura! It’s really good to read posts just in time when you needed it. I appreciate that you created a concise and straightforward reasons why we need to track our daily income. I agree with the 7 reasons presented here particularly numbers 1, 2, and 3. Our income greatly affect our productivity. Whether we reach, exceed, and fall short of our daily goals it’ll motivate us to do better next time and make a working schedule that will help us reach the goal.

    With my new job, I can say that I’m falling short of my goal and I definitely want to reach it. This post is really helpful. Thank you for sharing.

    I found this post shared on Kingged.com, the Internet marketing social networking site, and I “kingged” it and left this comment.

  5. says

    Sure, tracking daily freelance income is very helpful. I have tried it many times and it helps improve accountability. From this post, I also seeing that it has helped to motivate me in doing some jobs in the past better. Thanks for sharing these benefits Laura.

    In the social bookmarking site for Internet marketers – kingged.com, this post was found and the above comment was left.

    Sunday – kingged.com contributor

    http://www.kingged.com/7-reasons-why-you-should-track-your-freelancing-income-daily/

  6. says

    This is the single best post about freelancing in the past couple of months and might have changed my way of working forever. Genius! All the other posts keep on blabbering about how you should make lists and set goals (which is fine), the advice presented in this post is the most practical and motivates a lot, at least for me.

    Thanks you!

  7. Chris says

    I must admit I only issue invoices to clients two or three times a year because it is such a boring procedure, and I transfer money from my business to my personal account about once or twice a year. I always have more money than I need in my account, more than enough to put away $450 in savings and $600 in pension payments every month as well as pay for mortgage, bills, food, holidays and wine.

    This is how I’ve been working since I went full-time freelance in 2004, I guess I’m doing fine without getting obsessed about how much I earn :)

  8. Chris says

    Oh, BTW, I am a translator. I do no marketing whatsoever, but never have downtime except when I choose to have it.

  9. says

    I must admit I don’t check daily and maybe I should. I did set up a separate account to keep all my freelance in and outgoings separate – that really helps. I invoice at the end of each project and luckily most clients pay without being prompted. I then check my account and divide by working days to see how much I earned per day or week that month, Some weeks I have a big :) some weeks not :( – but that’s the freelance way.

  10. says

    YES! I definitely agree to this one.

    Some freelancers may not even thinking of this right now but if you are very organized and you manage your system well, then you will not having hard time to track your income daily.

    This is good tips to think over. I might as well use it! LOL!
    I found and “kingged” this on the Internet marketing social site Kingged.com

  11. says

    Generally staying organized is a must if you want to get stuff done. Lack of organization and poor management skills (micro, macro, self or team management) will lead to that person being limited. Is like trying to compute a lot of stuff on a slow and old computer.

  12. says

    In addition, you must be aware of your market value as well as your value to the business.
    As the business owner learns and develops the
    business, they can apply the more advanced strategies to add products, services or other money making ideas, but the core product remains simple to understand and easy to get set up and
    working. You can so much sooner practice bad habits than
    good ones, but when you do the work with instruction and direction, you will have
    a steep learning curve.

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