For much of my freelance writing career I figured there was no way to forecast my income. Money was either coming in or it wasn’t; it either arrived or it didn’t. Truth be told, I felt pretty helpless about money for a long time.
Then I learned how to get some control without going crazy or learning esoteric economics. It started when I first learned to track every penny that goes in and out. (A program like FreshBooks or YNAB can really help.)
The next step was to develop a spending plan which I use to decide exactly how I was going to spend my money each month.
One day I realized I could also use my spending plan to also project my income month-to-month.
I was reminded of this I saw this in comments:
“Awesome, just signed up for early notice of your Freelance Writing Business Solutions Course! What really gets me is the accounting- I need to figure out a simple way to project cash flow and all that.”
The short answer is I add some projections to my spending and earning plan. But that doesn’t tell you much.
Okay, but what’s a spending plan?
A spending plan is just that – a plan of what you intend to spend before you actually spend it. Some people would call it a budget but I’ve never like that term. My spending plans also includes my income or earning plans.
I use an Excel spreadsheet for this. A Google docs spreadsheet would also work. At the beginning of every month I list all my planned expenses.
You know, the items I pay regularly like rent or mortgage, groceries, utilities, insurance – all that. I also have categories for things like Gifts, Veterinary, and Travel – all of which happen at irregular times. The truth is I bang and copy from one month to the next because how I spend is quite predictable.
At the top of the spreadsheet I have also a section called Projected Income. Here I enter the amounts I expect to earn that month and from whom. Sometimes I’m operating with a contract that pays me monthly for as long as a year or even more. Sometimes I know or am pretty certain an assignment will come in. Here’s a decent example of how a spending plan can go together.
For example, I do a blog posts a month for a company and they pay me X dollars per post – that’s predictable income. I do a monthly column for another at X dollars – more predictable income. I’ve also got several clients who are after call me at almost any time and want some writing done. I don’t plug those in in ’till they actually call – that’s unpredictable income. So are the new clients I develop – unpredictable until a contract is signed and the money starts rolling in.
Looking at the totals projected on the spending plan for my income at any given month gives me a sense of where I am moneywise. Since I have my projected expenses on the same sheet, it’s easy to see if I’m ahead or behind.
It’s dirt simple. I also discovered just looking at the list of clients who are paying me and how much they are paying me gives me a sense of how much time I have available for more work if any. It’s not a direct correlation, but it helps me visualize my work.
By the week day or month
The advantage of the system is it’s so simple I keep it up to date most of the time.
I use it – I can look quickly at the spreadsheet for the month and know where I am moneywise. I can also multiply by three months or six months or even a year if I wanted project further than just what’s happening now.
Not only does the spending plan spreadsheet help me track my money, and help me visually see how much work I can take on, it also lets me know how much more marketing or less marketing I need to do because I see how much, or how little, is coming in.
Come to think about it the simple tracking on a spreadsheet is pretty ingenious. It also creates records of past performance. I wish I could say I invented the system but the credit goes to others.
Do you make projections about your income? If so how do you do it? Share with us in comments.
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Write well and often,