Budgeting can be tricky at the best of times but, for freelancers with irregular income, it becomes all the more challenging. Here are a few tips from the Paper & Coin team for ways you can stay on track with your financial goals even without that guaranteed biweekly pay cheque!
1. Track Your Monthly Expenses
For at least 1 – 3 months, see where your money tends to go. Where could you possibly make some cuts? Do this by keeping receipts, checking bank statements or tracking manually in a spreadsheet.
2. Plan From Your Lowest Month
Use your lowest earning month as a reference for the least amount of money you could earn. What could you cover with your lowest earning monthly income?
3. Take Care Of Essentials First
Your lowest earning month should be able to cover your basic expenses. Including:
- Basic Clothing
4. Add Supplementary Expenses
Once your basic expenses are covered, you can begin to incorporate additional expenses, like bills and debt obligations. Be sure that you incorporate these before disposable spending. That means, you’d cover utilities, student loan payments and credit card balances before budgeting for eating out, buying new (unnecessary) clothes, hobbies etc …
5. Have A 1 – 3 Month ‘Slack Fund’
Depending on the nature of your business, you’ll have both busy and slow seasons. You’ll want to be prepared for your slow seasons so it’s best to think ahead. During busier times, start saving up a fund to ‘pick up the slack’ and hold you over during slower seasons. Having between 1 – 3 months of expenses set aside would be ideal.
There you have it! We hope these five steps help get you on your way to managing your income successfully as a freelancer. Now go get ’em you boss, you!