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:
- 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.
- Helps with budgeting. Knowing how much you earn each can help you understand how much you should spend and how much you should save.
- 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.
- 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.
- 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.
- 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.
- 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.
Have you tried tracking your income each day? Have you found it helpful?
Share your thoughts and experiences in the comments.