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This is a guest post by Ryan Battles, the co-founder of Harpoon—a financial goal setting, time-tracking, and invoicing app for freelancers. Feel motivated to set and track your financial goals after reading this post? Try a 14-day free trial of Harpoon and see how easy it can be.
When I first started out freelancing, I was in panic mode. I took on every job that came my way, and even took on projects that were way out of my area of focus.
The answer was always “yes”:
- Can you make me a website? Yes.
- Can you do X for $80? Sure.
- Will you take my dog to the groomer? I’d love to.
I lacked direction and clarity. I had no idea how much money I was planning to make, what types of jobs would get me there, and which skills to market. In short…I didn’t set any goals.
This had to change.Image Credit (CC)
Fortunately, as I became more comfortable as a freelancer, I started realizing that in order to find success, I needed to be specific about what I was going to do, and how I was going to do it. I took a personal retreat for reflection, and after looking at my expenses over the past few months, I knew what I needed to accomplish in order to be profitable.
I had a goal. A specific, measurable, achievable, realistic, and time-oriented goal. I was going to make a certain amount of money within 1 year.
With this goal in my head, and using a spreadsheet to measure my progress along the way, I discovered a handful of benefits that I didn’t even realize would come now that I had my goal. The simple act of committing to a specific goal changed the way I did business, and increased happiness both professionally and personally.
I realized that setting a freelance financial goal:
Helps Make Better Decisions
As I mentioned earlier, I used to say “yes” to every request that came my way. After all, a “yes” meant more money, so I’ll take everything you’ve got! The truth is, actually, we don’t have an unlimited amount of yeses. In addition, not all yeses are equally profitable.
Taking on cheap jobs sounds harmless if you weren’t booked anyway, but when you think about it, you might be better off keeping your schedule clear so you can spend more time trying to land those larger projects that are quite a bit more profitable.
When you have a freelance financial goal in mind, you know exactly what you need to make that month, and can have more clarity when it comes to knowing which projects are going to get you there, and which ones won’t.
In addition, when it comes time to negotiate with your clients, you’ll have a firm number in mind that you need to hit in order to achieve your goals. It makes it much easier to walk away from a deal when you know you are just shooting your goal in the foot if you accept it, and with negotiating, the willingness to walk away gives you more leverage.
A clear financial goal helps freelancers define the following:
- What level of salary do I need to shoot for?
- Which types of projects allow me to provide enough value to ask for this rate?
- Which types of companies have the resources to pay for my services at the rate I desire?
In short, goals help freelancers know exactly what to say “no” to, and helps them brainstorm the right areas to focus on in order to reach that goal.
Reduces Bad Stress
A few years ago I went through a month or two where I was really doubting myself as a freelancer. I started asking myself the dreaded questions of self-doubt:
- When am I going to admit that I need a “real” job?
- Why can’t I seem to make this freelancing thing work?
- Why does everyone else seem to be so successful when I struggle?
This attitude showed up whenever I had a conversation with someone where they asked me about how work was going. I usually replied, “it’s slow…but I’m pushing through”.
But then I realized something.
I took the time to go through my invoices over the last year, and added up other sources of income that I forgot about from a few months ago, and when I added it all up, I realized that I was actually on track for the year, and was even a little ahead!
I had some profitable months earlier in the year that more than covered the low months that I was experiencing at that time. By dividing my yearly goal accordingly, I realized I was right on track.
My attitude instantly changed.
When you don’t have a goal, and you don’t track your progress against it, bad stress can creep in, which is unfortunate because it can often be unfounded.
Increases Good Stress
My last story had a happy ending, but I’ve got to be honest… there are times when I need a good, swift kick in the freelance pants.
Just as there have been times where I was stressed and I didn’t need to be, there have also been times where I’ve been enjoying the freelance life, and haven’t been as aggressive as I could have been with finding new freelance work.
This situation tends to appear whenever I receive a large check from a client. I get all sorts of happy feelings as I cash the check, and those feelings allow me to celebrate a bit and relax my drive for more work. Knowing exactly where I stand in regards to meeting my goal for the year helps me stay grounded, so while I can celebrate, I know exactly how much work I still have ahead of me.
To be honest, this type of stress has been instrumental in helping me find success as a freelancer. This positive stress helps me to avoid the temptation to play some video games, to start a new season on Netflix, or waste too much time catching up on internet chatter.
Allows You to Enjoy LifeImage Credit (CC)
Many of us went into freelancing because there are some benefits that you just can’t enjoy at a traditional workplace. Perhaps you enjoy the thought of earning an income while traveling, or want to be free to work remotely from your favorite coffee shops.
When you track your financial goals, you are armed with the knowledge needed to make pro-active decisions in your business. Need a vacation? No problem, do the math to see what you need to make to enjoy it and still hit your goal. Want to know if you should purchase that shiny new object? Check to see if you are on track to hit your goals, if not, perhaps it should wait.
Finances can be an extremely emotional subject. When we ignore or fail to think about setting goals and measuring them, we take a reactive stance instead of a proactive one. Our emotions can cause us to make poor decisions, or bring about poor self-confidence that is truly unfounded.
As a freelance worker, I never knew whether I was “successful” or not. Yes, I know that success isn’t strictly defined in monetary terms…but from an income standpoint, was I hitting the mark? Was I achieving what I wanted to achieve? I had no definition of what that even looked like. I would either compare myself to others from an income standpoint, or I would go off of my most recent feelings about how work is going.
Once I sat down and outlined my freelance goals, and what income I was aiming for, I grew in confidence and made much better decisions. I said “yes” to the right things and “no thanks” to others.
Setting a financial goal as a freelancer changed everything about the way I did business. It reduced my stress levels, provided me with some needed motivation, and paved the way for me to find success as a freelancer.