How To Budget Your Money When Working As A Freelancer
As a freelancer, you are in charge of your money and your budget. You may have several different sources of income and struggle to budget and record your earnings. Your income isn’t regular and you may find that often you have more month than money. How then do you learn to budget when you are working as a freelancer?
You will have to begin by basing your monthly budget on what you have earned the last six to twelve months. If you have not been in business that long then aim for three to six months. Total your expenses for the last three to six months and then divide accordingly. Now, project your cash flow for the month based on your lowest earnings in that three to six-month time frame.
By projecting your cash flow based on the lowest month of earnings, you will find that you have a buffer of safety for your income. This is crucial to your survival. You now know that you need to earn at least a certain amount in order to stay afloat financially. Anything that you make above and beyond that amount is extra and can be put into savings accordingly. Be sure that you are saving a portion of all that you make because you are going to have to pay taxes on any income earned. Always put some in a savings account for those lean months.
If you find that your lowest income amount cannot cover your expenses, then you need to adjust your fees accordingly. To find out the average fees that you are freelancing in, check online and see what others are charging for similar services. To do this, simply plug in the search term for your services into your favorite search engine and pull up a few others that are freelancing. You want to find out what they charge for services of the same nature.
You may also wish to determine how long they have been providing such services and see if your expertise matches up. If so and you are charging less, you may want to increase your prices. If you are going to be charging more you may not be able to charge your current clients more but be sure that you charge a higher fee for any new clients that you take on.
Budgeting when you are a freelancer can take some finesse but with practice, you’ll be able to do so easily. Keep in mind that as you add services, you should be adjusting your fees accordingly. Always use a spreadsheet to track your earnings. There are bookkeeping services that can help, such as Quicken or GoDaddy Bookkeeping.
Never sell yourself short. Remember that you must be able to pay your bills as well as earn a living. It is normal for freelancers to increase their fees as they become more familiar with a topic or concept and the longer they offer the service.
Your budget should be something that you adjust on a frequent basis. It is wise to check it every few months to be sure that you are coming in within your budget.
Thanks to Brock for this guest post, Brock Hamilton is a successful entrepreneur and internet marketer. To read about the latest tips and advice on boosting your income visit his site, Income.com today.