As freelancers, our income usually varies from month to month. That means you can always earn more, but there’s also the possibility you might fall short of your goals from time to time. If you’re not prepared for all that excitement, freelancing might not be right for you.
One of the best things to do when you start working on your own is to set realistic income goals. This way, you’ll know exactly how much money you need to pull in each month to live comfortably. Plus, having a figure to shoot for will enable you to do your work more efficiently.
In this article, I’m going to talk a bit more about why you need to set freelance income goals. Then I’ll teach you how to do it in three simple steps so you can get a good handle on your finances. Let’s talk money!
Why You Need to Set Income Goals as a Freelancer
You probably know exactly how much money you need to get by each month. We all want to earn more than that, of course, but knowing how much money you actually need provides you with a figure to shoot for.
Ideally, you will also bring in enough money so you can have fun and have some leftover to pad your savings at the end of each month. When I used to work regular jobs that required me to leave the house, I knew how much money I was going to make each month. However, as a freelancer, that figure varies, so I try to keep myself grounded by aiming for a specific threshold each month.
When I started, my first freelance income goal was bringing in $1,000 a month. Now that figure is higher, and I know exactly how much work I have to do to get there. That experience means I know when I have to hustle extra hard to bring in new business and when I can sit back and relax a bit.
The bad news is good clients don’t grow on trees. You need to be proactive when it comes to hunting good freelance writing opportunities. I’ve had good success following job boards such as Paid to Blog, but there are plenty of other ways to suss out new clients, so you don’t need to limit yourself to only one method. That being said, let’s talk about how you can set your own freelance income goals.
How to Set Your Freelance Income Goals (In 3 Steps)
We’re going to talk numbers in this section, so break out your favorite spreadsheet software and let’s get to work!
Step #1: Make a Budget
You’ve probably heard this advice a lot before, but there are few things as effective when it comes to money management as planning out a budget. I’m a traditionalist when it comes to budgets, so I just keep track of everything using a spreadsheet, which I update every couple of weeks.
The goal here is to figure out exactly how much money you’re spending each month now. That information will tell you how much money you want to bring in each month if you want to maintain your current lifestyle or improve it.
Let’s say, for example, you spend about $2,000 a month between the basics (food, rent, Netflix, and such) and having fun. That means you need to earn back that amount each month unless you want to go in the red. However, I always recommend you aim higher with your income goals, not so you can spend more, but so you can save money more aggressively.
The life of a freelancer may sound glamorous, but we’re also more vulnerable financially since work can vary from month to month. I’ll talk more about savings in a minute, but for now, go ahead and do some calculations to figure out how much money you’re spending each month, and on what.
Step #2: Calculate How Much Work You Need to Meet Your Budget
To build on my earlier example, let’s say you set your income goal at $2,500 per month. If you’re spending $2,000 to maintain your lifestyle, that extra gives you some breathing room, which is always desirable.
Your next step is to figure out how much work you need to do each month to hit that figure. That will depend largely on what your per-word rates are. For example, if you charge $0.10 per word, you’d need to write 25,000 of those to hit that number. That’s 25 articles of 1,000 words each month, which works out to about six pieces per week.
If you have enough work locked in to hit your income goal this month, you’re good to go. You can relax a bit, although it’s always smart to continue pitching clients, even when you’re doing well financially, so you don’t need to rush if lean times come around. Plus, the more clients you manage to land, the easier it becomes to find work thanks to referrals. Once your roster is full, you can work on increasing your rates and your income goals accordingly.
Step #3: Get to Work on an Emergency Fund
At this stage, you should have a rough outline of a budget and an income goal in mind. Once you are done with this article, you should flesh out that budget and add more detail to it. Seeing all your expenses laid out side by side can be illuminating, and I guarantee you will be surprised by the things you’re spending money on.
Earlier on, I touched on the subject of saving as a freelancer. Since our work lives can be somewhat unstable, the best piece of advice I can give you is to set apart a nice chunk of your income each month for a rainy day fund. In step number two, I used an example of adding an extra $500 to your income goal, which is a fantastic number if you want to save aggressively.
Ideally, you should be saving around 20% of your income. All that money should go into an emergency fund that can cover your full expenses for at least three months. That sounds like a lot of money, but believe me, you’ll get a lot of peace of mind from it. More importantly, having that money put aside will make it so you don’t have to take on jobs you don’t want to, so you can focus on gigs that pay well and look great on your portfolio.
We all want to make obscene amounts of money, no matter what our jobs are. However, saying you want to aim for $10,000 per month isn’t realistic unless you’re at the very top of the ladder as a freelance writer. A realistic income goal will cover your month-to-month expenses and enable you to save enough money for the occasional luxury. As far as I’m concerned, that’s more than enough, and it makes those months when you shatter expectations all the more rewarding.
If you’re ready to get to work on your freelance income goals, these are the easiest steps to get started:
- Make a budget.
- Calculate how much work you need to meet your budget.
- Get to work on an emergency fund.
Do you have any questions about how to set realistic freelance income goals? Let’s talk about them in the comments section below!