How to track your freelance finances like a boss
Kaila's note: This post is specifically about how to use this Airtable template I've created. If you've never used Airtable before, first of all reevaluate your life, then check out their tutorials to help you get started. Then come back here. Don't worry, I'll wait.
As I've mentioned in a previous post, Airtable is basically my life. But actually. I use it for everything. Today, I wanted to share my self-made Finance Management system because it’s worked quite well for me thus far trying to organize myself as a freelancer.
Click below to get a copy of my template and follow along!
How it works
I’ve set it up into 2 tabs – Finances and YoY (Year over Year).
It doesn't look like much, but that's the magic of Airtable. All the same information can be sliced and diced in different ways inside the same tabs. The magic inside this template is in the Views.
Math-o-phobes, fear not. Much of this templates only requires you to copy information from your accounts and then let the formulas do the heavy lifting.
I've added extra info to each column in the description in case you forget or it's unclear.
Okay, so let's break this down.
Check on your budget
End of Month, my first View option, is exactly what it sounds like. At the end of every month I come in here and fill out all the relevant fields. This page is designed to help me see my income relative to my debt and budget.
I'll be able to see if I was over or under my budget, remember to chase any unpaid invoices from not-so-timely clients, and keep an eye on my debt trends month-over-month.
The Budget part is super handy here and totally customizable. The red box on the left is a formula field which accounts for any extra savings deposits, debt payments, and budget increases. The default budget is $5,800, but you can change it to whatever you want. The Budget Difference column is simply your Budget - Personal Spent. This means a negative number there is bad news bears... #sadface
Personally, I use Mint to track my spending and And.co to track my income and expenses, so the manual entry fields here are a piece of cake. If you don't use those or similar tools, this will require a little more basic addition from you to add up your purchases or how many hours you worked.
pay yourself... and your taxes
Our next View option is Payroll. Again, pretty self-explanatory but overall, this page helps me see how much I earned, how much to pay myself, and how much to put away for those pesky self-employment taxes.*
You might notice once you get in here some of the fields are already populated. That's because they're all part of the same record and you already filled them out in End of Month View. See? Easy!
I personally break down my payroll as 33% of earned income goes to taxes. Then of the total Remaining after Taxes, I put 80% in my pocket and the other 20% in savings. I built in a good double-checker in the last column to confirm before I move any funds.
The theory is the Remaining amount and Total Transferred should match using different methods to calculate. The Remaining amount calculates based on (Account Total + Billable Expenses) - Financial Margin. Total Transferred is Taxes + Wages + Savings. Therefore, essentially what I'm confirming is all the money I pay out is equal to what was in my account after my margin.
Let's do a simple example. Say I have $3,000 in my account, my margin is $2,000, no billable expenses, I use the same percentages I mentioned above, and I earned $1,000 in January.
Remaining: ($3,000 + 0) - $2,000 = $1,000
Total Transferred: $330 + $536 + $134 = $1,000
The best part is all the formulas are right in there for you. Just copy and paste your Income, Billable Expenses, and Financial Margin and the rest is done for you.
Look back at it
The YoY table you probably won't use that often because it is designed to help summarize the entire year. I'm able to look back and see how many hours I worked, what my average rate was, how much I earned total, and all the other budget-y goodness I need to know. The best part is this entire table is totally automated, so there's nothing I need to do to fill it in.
As you go month by month this information will automatically calculate. The Status column is up to you to determine what your Red, Yellow, or Green Zone targets are.
That's pretty much it! I've included lots of extra info and explanations inside the template on each column if you get stuck. If you need more help, shoot me an email here. Then @ me later with photos next to your piles of money.
Didn't get the template yet? Do it now!
*I am not a tax professional and depending on your income level 33% may not be enough to save for your taxes. Consult a CPA to assess your unique tax situation.