If you are a freelancer, you know that your income can tend to be much like a roller coaster. One month you could be very busy and make more than your bills, then the next month you could be desperately searching for more work. That is just the way of freelancing life. It is essential, however, for freelancers to have a budget and a backup plan for these lean times. Here are some budgeting tips for freelancers.
Track Your Spending and Income for Three Months
You need to make a budget, but it is impossible to do if you don’t know how much you are spending each month. Track your spending for about three months. This is not really about your fixed expenses that don’t change month to month, but more about the flexible expenses, such as eating out, clothing, subscriptions, and the like. By getting an average of these expenses, you can compare it against your average income those three months. This is where you need to be to set a budget.
How Much Should You Be Spending?
Experts recommend that you live on 50% of your earnings. This may seem like a lofty goal, but by living on the 50% and then splitting the other half into 30% for flexible expenses and 20% for savings, you can stay on track with your spending and saving. Flexible or discretionary spending is really where your budget will be successful. Keeping close track of your discretionary spending will ensure you have enough to pay those fixed expenses and save for the future.
Find Ways to Cut Your Spending
With any budget, there are most likely ways to make it better. When you are tracking your spending, it is an excellent time to take note of any subscriptions or other monthly expenses that may not be a necessity. Many people are surprised by how many expenses automatically bill each month via your Apple Store or Google Store. Here are some other ways you can cut your spending:
- Save some money by only buying groceries once per week or less. The more often that you walk into the grocery store, the more you will spend.
- Comparison shop for everything! You can save a large amount of money by checking prices and comparing them store to store or service provider to service provider. See if there are coupon codes available for purchases. All of this can add up.
- Sell those things you do not use/need anymore. You may be surprised by how much money you can make by simplifying your life. From clothing to electronics to jewelry to toys, there is a market for just about everything these days.
The freelancing life can be a rewarding one, but if you are not able to meet your financial needs, it will be short-lived. By taking the time to budget and determine what is most important to you, you can better plan and spend wisely. Spending wisely can keep you focused and on track with savings and retirement.