by Yolander Prinzel
This morning I’d like to give you an actionable plan for budgeting. As a freelance writer, your budget (if you’ve even dared to write one down) probably looks like the jagged edge of a dog-mauled carcass.
Okay, maybe that’s too strong a visual for this morning. What I’m trying to say is that your income varies–some months it’s a big number and other months…maybe not so much. That makes budgeting difficult, but not impossible.
1. Make a list of your non-negotiable expenses. Things like rent or mortgage, insurances, electricity, retirement and long-term savings and food.
2. Make sure you have an intermediary savings account with at least 1 month’s worth of these expenses in it. The purpose of this account is to help you deal with slow paying clients or slow months. If you take from it, you need to work extra gigs in order to replenish it.
3. Next, write down your negotiable expenses. Things like cable, phone, cell, entertainments, etc. These expenses may not be negotiable with the entity you owe money to, but they are not keeping you alive or with shelter so if you had an emergency, you could justify not paying them.
4. Combine lists 1 and 2 into a master list of your expenses. This is what you really need to make each month in order to fulfill your budget.
5. Now, write down all the steady gigs you have each month that have a “guaranteed” income amount.
6. The difference between the amount of steady income you have and your combined list of expenses is the amount of money from additional gigs that you need to make.
7. At least 25% of the money you get from gigs that put your monthly net income over the amount you need to cover expenses should be put in your intermediary savings and another 25% should go to your long-term savings.
As a freelancer, it’s difficult to budget far in advance. Often we don’t know from month-to-month what our workload or income will look like. That’s why it’s so important to control your expenses and set aside any extra income you make.
Be sure to stop by on Tuesday because I have a totally awesome chart for y’all.
Yolander Prinzel, ACS is a financial writer as well as a series 7, 66 and 2-15 licensed financial representative. With a decade of financial industry experience, she was the and the Director of Operations for The Compass Agency USA and has also been a trader for . No matter what you may think, none of her posts are advisory, they are simply informational. Only an advisor with close, personal knowledge of your financial situation can offer advice.