Happy new (financial) year! While the start of the calendar year is often rife with resolutions about losing weight, setting new career goals and crossing items off your bucket list, we think that the start of the financial year deserves some attention on self-improvement too.
Specifically, it's vital to look at an area that is often the most neglected by writers, artists and other creative types. Money! Your finances: how to keep them in order and set yourself up to earn a decent (and ideally lucrative) income.
Too often, we hear “Oh I'm not good with money” or “I just want to be creative – I don't want to learn about tax.” Okay, sure. If you're happy to starve in a garret and to never earn decent money from your creative pursuits, that's the perfect attitude. It's very romantic (albeit unhygienic…).
You actually don't need a degree in accounting or taxation to get the basics right; no bean-counting necessary. And while it may be too late to reinvent your return for this year, setting just a few goals this week will lay the foundation for a healthy financial year ahead.
Resolution 1: Get rid of the shoebox
Do you think your accountant loves it when you turn up with a shoebox of receipts for them to sift through every year? More importantly, do you think you have a good handle on your expenses if you're keeping them in a shoebox? Are you maximising your deductions (thus decreasing the tax you need to pay) when you don't even have a good system to track of them?
These days, it's never been easier to track your expenses. With apps like XpenseTracker (for iPhone), you can:
take photos of your receipts (bye bye shoebox!)
sort expenses by date, category, payment type or client
always see a running total (let's see a shoebox try and do that…)
export your expenses directly to your desktop PC or Mac.
download currency exchange rates (if you need this function)
it can even tracks your mileage (get rid of filling in those dead-tree log books!)
Basically, you can look up stuff easily and export a pretty spreadsheet whenever you want. Your accountant will love you, you'll always have a clear idea of your expenses (even running totals) and you can rest assured that this aspect of your life is neat and tidy (so that you can concentrate on your writing!).
(I'm an iPhone user so XpenseTracker works for me. Pocketbook works for both iPhone and Android. Want someone else to do the data entry for you? Try Shoeboxed.)
Resolution 2: Track your invoices
As an editor, it drives me bonkers when writers email me months after they do a job to ask: “I can't remember if I invoiced you or not. Can you check?”
What the …? No, the editor is not your secretary! You need to be responsible for tracking your own invoices – not just who's been invoiced but, even more importantly, who has and hasn't paid so that you can chase the ones that are outstanding. (Because money is useful, remember!)
Sure, there are many invoicing websites out there, but you don't even need to go to that level. When I first started freelancing, I created a simple spreadsheet with columns like:
Name of publication
Article title
Word count
Word rate
Total amount invoiced
Date invoiced
Date payment received
Each row represented a day – to easily see if I'd sent an invoice that day. It motivated me to keep pitching – and invoicing. I played a game with myself to ensure that I had as many days filled in as possible.
Below is an example of a spreadsheet – you can download a sample as an Excel spreadsheet by following this link: Sample work and invoice tracker.
Resolution 3: Set targets for yourself
If you're serious about making money from your writing, you need to treat it like a business. And, trust me, when you know that your business is in good shape, you can focus your mind on creating excellent work.
So set targets. These might be:
number of pitches you send each week
number of stories commissioned each month
total amount invoiced each month
Do what works for you. When I first started freelancing, I decided on the yearly income I wanted to achieve. I then divided this amount by 12 (months) to determine how much I would need to aim for each month in order to get to my goal. (If you're working out weekly goals, don't divide months by 4 – it's not exact enough! Instead, divide your year by 52.)
It's important that you set targets that are achievable but also stretch you a little bit (so you don't rest on your laurels).
This really is the best time of the year to get your finances off to a flying start. Spend just half an hour on this and you'll be up and running before the week is out – we've even provided a spreadsheet for you! So, what are you waiting for? In June 2015, you'll wish you started today.
You actually don't need a degree in accounting or taxation to get the basics right; no bean-counting necessary. And while it may be too late to reinvent your return for this year, setting just a few goals this week will lay the foundation for a healthy financial year ahead.
