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Track Your Money – Helping Freelance Writers Deal With Money – Part 1

cat_with_empty_bowlBy definition freelance writers have both an uncertain and an uneven income. In the United States, we must also pay self-employment taxes as well as for all our own health insurance and other benefits – at least until we get to retirement age.

In order to keep from running out of money or running up debt we have to do, perhaps,  a more precise form of tracking and planning than those with regular paychecks. (I say perhaps because I know people with regular paychecks who track their money in the way I’m about to describe, and they tell me it’s helpful for them too.)

In my experience there are several parts to the solution of handling uncertain and uneven income well. The first is tracking all our money all the time.

Money Tracking Tools

I actually enter in Quicken every dime I spend. I do this by keeping receipts and carrying a 3×5 card to write down cash payments that don’t generate a receipt. Others use a spreadsheet. Of course, I track income the same way.

Leo Babauta who does the wonderful ZenHabits.net has an article called 6 Great Free Alternatives to Quicken & MS Money that can help you find a tool for tracking that will suit you.

And yes, when I was first challenged to do this I thought they were nuts. Who wants to spend hours and hours trying to find every single penny you spend in a month.

It turns out that it’s easy to do if I do it regularly (which for me means 6 days a week and means weekly or monthly for others). In fact, I spend about five minutes daily, and maybe 15 or 20 once a week when I reconcile my accounts.

Positive Results of Tracking Money

There are two major benefits I experience when I track my earning and spending:

  • It turns out there’s real peace in actually knowing how much money I have rather than how much money I hope I have.

If you’ve ever written a check hoping instead of knowing it would clear you, know what I mean. If you’ve ever written a check hoping a deposit would get there first, you know what I mean. If you’ve ever not bought something because you weren’t sure you had enough money, you know what I mean.

  • Looking at how I really spend money rather than how I think I spend money helps me make better choices.

Writing down each expense, or as I collect receipts knowing I’m going to write it down subtly changes how I spend, usually resulting in spending less without feeling deprived. Getting conscious of how I spend money means I do a better job with it.

Clarity Not Vagueness

Another way to state this is that by tracking my money I began to get out of vagueness. Although I didn’t know it when I began tracking, that clarity also contributed to my finally beginning to charge what the market would let me charge for my writing.

Tracking my money is only the first step. The next step is sorting it into meaning full categories.

Do you keep close track of your money? Why?

Part 2 – Categorize Your MoneyPart 3 – Create Spending and Earning Plans


Image from http://www.sxc.hu

{ 8 comments… add one }
  • Great article, Anne 🙂

    I’ve been using SideJobTrack (www.sidejobtrack.com) for years. I love it. It’s ridiculously simple and, as far as I can tell, very similar to some of the other online options listed in the zenhabits article. (Though, it’s only good for tracking income – not expenses. It’s for that reason I’ve been mildly flirting with other programs for a while.)

    • Darn, Sidejobtrack isn’t taking any more new registrations… they point to two other services that cost a bit. Interesting.

      • Hmm. Scary, too, because a couple of years ago the developer mentioned shutting down the service due to a lack of time for maintaining the site (if I remember correctly, she’d just taken a job with Facebook). From what I gathered there was a huge outpouring of “pleasenoplease keep it open we love it!” – esque feedback, and it’s remained active. Deciding not to take any new registrations might have been her way of keeping maintenance time to a minimum (well, as minimal as possible), but it still makes me nervous. Thanks for letting me know that; it shows I really do need to get serious about looking at other options.

        Given that it’s just February, now might be a great time to save my info from the past years and just transfer my 2011 info to a new service. (Don’t mind me…just thinking out loud, ha!)
        Alicia recently posted..Setting- Increasing- and Sticking To Your Freelance Writing RatesMy Profile

        • Yeah, I’m doing some re-setting up of how I track money… just another thing that always evolves.

  • Elizabeth West

    Gaaah I need this. I’m not very good with money and although I long for the day when I don’t have to slog to a job every day, it also scares me.

    Thanks for the post, Anne.

    • Anne

      Handling money turns out to be a learnable skill 😉

  • As long as you track on a daily basis it takes no extra time (IMO). Save your receipts, file them in a specific folder for each unique expense, and at the end of the year just give all your folders to your accountant and let him to all the figuring for you.
    .-= T.W. Anderson´s last blog ..The niches you didn’t even know you had =-.

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