A Super Simple Method for Tracking Your Monthly Income
Do you know how much money you have coming in this month? I mean, from all sources. Your paycheck, your business, your side hustle, poker nights, all that yarn you have on eBay… whatever.
If you have one job or contract and you collect a regular paycheck, it doesn’t take much mental energy to get a sense for how much you’ll have to pay your bills and keep your cupboard stocked with chocolate and whiskey. When you work consistently, you typically get paid consistently and that’s super cool.
However, when you work on multiple projects, and you’re not working under any longterm contracts, your pay may not be so regular and it can be harder to know. Suddenly it’s the 28th and you have to check your account balance to figure out if you can pay to live another month. I hope that’s not the case and you have so much money coming in that it’s a no-brainer. Still, documenting your earnings and knowing what’s coming down the pipeline is a good practice.
I’ve been freelancing on many different projects for the past 12 years. Like all businesses, my income has had its share of highs and lows. For a long time I spent a good part of my weeks obsessively tracking my billable hours and worrying about when my next project would start. I never had a clear picture of what the next few months would bring. That was stressful and I wasted a lot of time worrying about stuff I could actually track.
Then I learned about tracking my monthly income using a pipeline spreadsheet. I’ve been using this method since 2014 and it’s made things much clearer for me.
As you’ll see, this thing is super simple. Each month is laid out in columns. In the first column under the months, you list your different sources of income, each with its own row. In the next columns within those rows, you enter the amount of income you expect to have come in that month.
An important distinction is that you’re not listing what you hope you’ll make, but what you actually have coming down the pipeline. As in, what you’ve already earned and is either in your checking account or on the way.
The last columns and rows calculate totals for you. At a glance, you can get a really good picture of what you’ll be paid in the very near future. As a bonus, when you look back over the year you can analyze your earnings. Because I’m a geek, I create charts of income for different categories through the years.
If you’re a spreadsheet wiz, you can make this yourself pretty easily. The formulas are simple sums. If you hate setting up stuff like this, I created one for you as a Microsoft Excel file. It’s a free download right here: Pipeline Spreadsheet
How it Works
I’ve added all kinds of fancy arrows and callouts in the image below, but I’ll also give you the rundown.
The top row is just the months of the year. Easy peasy.
The first column is where you will list your sources of income. You can see from my example that I list four. This is really up to you, you can split up different contracts or projects or just combine them all under “Freelance.”
In each monthly column, you simply list any income you know is coming for that category. I update this every time I have something new come in. Below that, I list each client and the amount I expect to receive from them. It’s not necessary but I find it helpful. Again, the amount you put in the income cell is only what you know is coming in that month. Not what you wish will come in or a lofty guess. This is for any money that’s going to hit your account for sure.
Note: I have a separate spreadsheet for all my passive income sources. I think I mentioned that I’m a geek.
On the far right in column N is the sum of your monthly income for each category. This calculates automatically because there’s a formula in that cell that tells it to. If you edit the cells in column N, they will cease to function and you’ll have to go old school and add them up yourself.
Similarly, Monthly Totals and Year Total update automagically, too. Isn’t that fun?
That’s really it. Super simple. As you do this throughout the year, I think you’ll find that you can better predict what’s coming and you’ll lose a little tension about it. Even if you see that June is looking a little weak, at least you’ll know that you need to do something about it. “Knowledge is power,” as the inventor of the spreadsheet famously said. Yes, I just made that up. But it feels true.
If you have any trouble with the download, the spreadsheet, or just frikkin’ making it rain every month, let me know. I’m here to help.