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Freelance Writing Income Forecasting

Freelance writing income forecastingFor 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,

Anne Wayman freelance writer

 

 

 

Image: https://www.flickr.com/photos/notionscapital/

{ 4 comments… add one }
  • Awesome, thanks so much for writing a post in response to my comment!

    I’ve been doing something similar, but without the spending forecast. I have a spreadsheet with a row for each client, and a column for each month, where I predict the income by when I expect to receive it (not when I earn it).

    But after trying to learn some accounting basics, I’ve been wondering if it would be better to keep track of income when it’s earned. Then again, at this point what’s really important to be is when I get my hands on it!

    And after reading this, I really like your system of having a spending forecast right along with the income forecast. Right now I do budgeting with Mint.com, but it’s not at all ideal for freelancers, since it expects your income & budget to be the same every month and you can’t plan ahead.

    I think I’m going to experiment with spreadsheets that include spending forecasts. I hate accounting, but I like organizing info with spreadsheets 🙂

    Thanks again for sharing your system- this is hugely helpful 🙂

  • On the same topic: while it sounds possible to “even out” income based on annual income (which is much steadier than monthly income), it’s not that easy. When the checks don’t arrive, bills are set aside — and when the checks DO arrive, the bills are paid. And then there’s relatively little money left until the NEXT checks arrive. So far, I haven’t figured out an easy way to ensure a consistent, smooth month to month transition, especially since some clients don’t pay until THEIR clients pay — and I’ve had to wait months in some (few) cases.

    Another point: if I assumed that a signed contract meant no chance of postponements and no slow checks, I would say “my time is booked, so I can’t take on more work.” But I KNOW that there is always the significant chance that a project will be delayed or a client’s client will have a 60 day pay cycle — so I am ALWAYS “free” to take on at least some more work, even if I have to work extra weekend hours for a short period.

    Lisa
    Lisa Jo Rudy recently posted..About MeMy Profile

  • OK, yes, spreadsheets are a fine thing — but unless more than a few hundred dollars a month is regular, consistent income I’m not sure how it helps. Yes, I can count on absolutely making about 1/3 of the income I need, but the rest is all about marketing — and projects are all about constant CHANGE! In this month alone, a $5,000 client decided to postpone a project for which I was to be paid in December, while a brand new client was recommended to me for a $4,000 project to be paid in November. I knew NONE of this in September! Hard to know whether Christmas is likely to be fat or lean until all the eggs are hatched and the chickens are safely in the coop!
    Lisa Jo Rudy recently posted..About MeMy Profile

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