The Importance of Tracking Your Freelance Time and Income

The Importance of Tracking Your Freelance Time and Income

I went full-time freelance in early 2009 after I got laid off from my job as a writer and editor for a custom publishing company in the aftermath of the financial crisis. Of course, there were lots of challenges in making the transition from an employee — where you’re pretty much told what to do and how and when to do it — to a freelancer, where there’s nobody telling you what to do or when or how to do it.

A few months into my freelance career I had one of those “light bulb” moments: I realized that I had no idea how productive I was in my work or how profitable the work was that I was doing.

Time = Inventory

It occurred to me that as a professional services provider, my time was my “inventory.” Businesses that stock actual physical inventory keep careful track of and control over their inventory, but I had absolutely no idea where my time/inventory was going or if I was selling my time/inventory at a profitable price.

So I decided that I would start keeping track of my time/inventory every day that I worked as a freelancer. That was almost eight years ago and I have a time sheet for every day that I have worked a self-employed freelancer since.

There were a couple of times as an employee when my employer required us to track our time for a few months, and I HATED it! But as a self-employed professional, I can’t imagine not keeping track of my time.

Tracking Income, Too

Not only do I track my time, but I also track the income I earn from the projects I spend my time working on. This makes it easy to gauge the profitability of every job I do — because I know how long I spent working on each job and how much I earned.

Having detailed time and income tracking sheets also makes it easy to set productivity and income goals and keep track of them. At the end of each year, I set an income goal for the next year and then break this down by month, week, day and hour. So I literally know how much I have to earn on average every hour that I work in order to meet my annual income goal, and I can check my progress at any given time.

I know that time tracking isn’t a revolutionary new idea, and if you charge by the hour (which I don’t, by the way — read this blog to learn why) you’re already doing this to some degree. But I’m talking about using time and income tracking as a productivity, profitability management and personal accountability tool, not just as a way to bill for your work.

Choosing a Tracking System

There are plenty of time-tracking software programs you can buy. But for my purposes, I just make a rough estimate of the time I spend on each job, as well as time spent on admin and other miscellaneous freelance tasks, and log it in 15-minute increments in a Word doc. Next to each time entry I also log the money I earned for that job on income-producing tasks.

I add up my time and income at the end of each day, then add up the total time and income for the week on Friday, for the month at the end of the month, and for the year on December 31. This gives me a detailed accounting of exactly how I spent my freelance work time and how much money I earned during the year. I can then see how I performed relative to my goals and set new goals for the next year.

Which time- and income-tracking system you use isn’t important — just figure out one that works for you and start doing it. I promise that it will make a huge impact on how you spend your time, how you price your work, and how you view your freelance business.

If you decide to give time and income tracking a try, shoot me an email at the address below to let me know how it’s working for you.

Authored by Don Sadler
Don Sadler hung out his shingle as a full-time freelance writer in 2009 after working for several custom publishing companies over the previous 24 years. Visit www.donsadlerwriter.com or contact him at don@donsadlerwriter.com.