How to budget and not screw it up: tips from a practicing freelancer

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Those who are in free floating do not receive a stable salary and bonus on the card. Therefore, it is important to handle money correctly.

Spoiler alert: Spend less than you earn. Boring, but seemingly simple, right? It will be much easier to transfer your personal budget to surplus mode and achieve a positive difference between income and expenses if you limit spending.

For self-employed people, creativity tends to be more enthusiastic than spending management. Indeed, this is very cool: you do what you love, and you also get money. You are making a decent income and you think budget planning is not for you. Stop, here the logic begins to limp on both legs.

If we don't control our expenses and don't know how much is spent on basic necessities, this will not end well. Spending more than you earn? This means that soon you will have to work harder.

None of us say to the client: “Come on, what kind of money, just pay me at least something, and I will do my job,” so why do we often don’t want to know what we are spending our money on? Controlling income and expenses is very, very important, because it is he who will help us understand what we can afford and what we cannot.

How to budget for a freelancer

1. Determine your salary

Yes, you work for yourself, but who said that in this case you cannot assign a constant salary - the same amount every month? Don't know how much? Take last year's average and pay yourself 70%. Leave the remaining 30% for taxes if you work as a sole proprietor, and unforeseen expenses. It turns out a more or less constant amount that can be disposed of.

2. Track absolutely all expenses

You can install a special program or just create a table for this purpose. Record all income and expenses there monthly. A new month is a new table, so you will understand what you are spending too much money on.

3. Find out your minimum needs

Calculate how much you spend on housing and food per month. In order not to get out of the budget, you need to earn at least twice as much. If it doesn't work, think about where you can save: an apartment, for example, or a car. The choice of housing and a car generally requires a very balanced approach, since the costs of their maintenance and periodic repairs will be an additional burden on your shoulders.

4. Create an airbag

You never know what, suddenly the flow of orders will decrease or another crisis will break out. It is enough to save 10% of monthly earnings for a rainy day. By the end of the year, there will be an amount sufficient for you to sleep well. Even if something serious happens, you will have something to live on.

5. Prioritize

If you need to buy several items at the same time for work or personal needs, rank the spending by importance. What should you buy right now, and what will wait a month or two? The purchase of most things can be safely postponed for one time or another.

6. Find ways to save money

Regardless of how much you make, find ways to cut down on unnecessary costs. Give up cable TV: why do you need it at all when there is Internet. Go to restaurants less often: cooking yourself is much more fun, especially if you do it for other people. Buy fewer new clothes: these are just rags. Save money on gatherings in a coffee shop: you can also brew coffee at home, it will turn out even tastier. In a word, if you can refuse something, give it up without hesitation.

By cutting down on unnecessary expenses, you save time that you used to spend making money to cover those expenses.

You have more free hours to enjoy life. If you analyze your spending over several months, you will see how much money is spent on things of dubious necessity. It turns out an impressive amount, right?

7. Expand your sources of income

If you are a freelancer, no one forbids making money in all sorts of ways. Design, consulting, podcast recording, copywriting - if one source is not profitable for one reason or another, others will help out. This approach will allow you to always be afloat and have a sufficient number of orders. In a word, if there is a way to profitably invest in one's own development, then this is diversification.

What I've learned in 18 years of freelancing

It is not customary to talk about money in a decent society, but sometimes it is still necessary. This is especially true for people who work for themselves. So, for so many years of independent swimming, I learned to be content with little. I don't need a cool car or an expensive apartment in the center. I use every dollar I receive as efficiently as possible, so I don't have to spend a lot of time making money. I can just live for my own pleasure.

Compliance with the budget is not at all moaning from the series "About grief, how can you live without all this!", But rather a funny game from which you can emerge as a winner every month.

I sometimes give myself small tasks: not to go to the store, but to use only the available supplies, not to visit coffee shops, or spend six months only on rent, food and gasoline. Come up with and you yourself quests that will help you wisely manage your funds.

I realized that free entertainment can be more fun than what money can buy. Walking, gardening, swimming in a river or lake, picnics, board games, house parties - it's really fun. My wife and I even turned down gifts for birthdays and other holidays, and instead just have a mountain feast. We don't need any junk, and new sensations always bring joy.

Outcomes

As mentioned at the beginning of the article, in order not to be aground, you need to spend less. What are the details of the process?

• Pay yourself a regular salary, even if your income changes from month to month, and you are the only employee.
• Know how much you get and spend each month.
• Remember why you make any money at all (life isn't all about work, money, and spreadsheets).

Well, it's time to start managing your money properly. It may not be as interesting as pure creativity, but it is very important.