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Keeping Your Head Above Water On A Freelancer's Budget

June 9, 2021

Hey freelancers, how is it going managing your money on a freelancer's budget? It's no secret that many freelancers struggle with budgeting due to the variability of their income.

It doesn't matter how much you earn because in most instances, as a freelancer, your money usually comes in waves. One month you're making a certain amount, the next month or week it's another. Sometimes your income is substantial for a few months suddenly followed by a huge dip in revenue.

It's not a bad thing to have a fluctuating income. Besides, it naturally comes with the freelancer's territory. Plus, most of us like the idea of controlling how much money we earn even if it varies, as long as it remains at a certain level. There's no company putting a cap on your earnings. For example, you charge a certain amount per-word if you're a writer. If you and the company (or individual) can't come to an agreement, you can always look elsewhere, while still maintaining your eggs in other baskets. You have the freedom to seek-out opportunities without "hiding your intentions from the boss or HR department."

Working for a company in the traditional sense is no guarantee of a job or long-term income. AI (artificial intelligence) is challenging the traditional worker and will to some degree, ostracize the conventional 9 to 5 work arrangement within the next few years. I wouldn't worry about it too much though. Anything "artificial" lacks a key ingredient "authenticity." As human beings, our creative instincts and natural abilities are required to sustain the terrestrial sphere, which cannot be suppressed; regardless of how much they threaten to do so.

Okay, getting back to the topic at hand.

In order to avoid many of the pitfalls that could leave you broke and homeless, here are a few tips (I gathered from various websites) that can help you "keep your head above water" on a freelancer's budget.

NOTE: I combined tips from various sites (and seeing that I learned about managing money the hard way) I included some of my own suggestions within the text.

There are three (3) main sites I used for information: thepennyhoarder,, The full articles can be reviewed via the links.

Budget Tips Every Freelancer Needs To Know

1. Know When Your Money Usually Arrives

As a freelancer your money usually comes in spurts. Sometimes it's monthly, weekly, bi-weekly, and so on. Try to pin-point when the bulk of your money arrives.

This way, you have a means of calculating your monthly costs and costs that can wait if a client happens to pay late for example. Of course, if you are one of those freelancers with a stash-of-cash, you will have no problem meeting deadlines for paying your bills each month if a payment arrives late.

As the article - from pennyhoarder - states if you have steady clients, it's easier to manage your monthly budget as you know when they pay. Knowing when your regular payments come-in, helps you plan and stretch your funds until the next payment.

2. Pay Yourself and uhm...Your Taxes

Another good suggestion from pennyhoarder. However, you'd be surprised how many people "don't" pay themselves. Sure they'll pay taxes, but forget about themselves as if they "have no right to their own money."

I suggest that even if you can only pay yourself 100 (of whatever currency you get paid in) per month, do it...!

You should appreciate yourself and your efforts. I would even go as far as to advise "paying yourself first." It doesn't have to be the same amount each month. Work within your budget and pay yourself what you can each pay period.

The article also suggests setting aside 20% of your income for freelance taxes in addition to 20% towards debt repayment, if you have debt. My advice is to use debit cards. Credit cards make debt too easy, especially if you're a freelancer.

You can only spend what you have with a debit card and besides "less is more." No credit card means less worry, one less bill to be concerned about at the end of the month, less distress about interest rates, better management of your know the drill.

In any case, do you want to be ensnared by things you don't need? It can easily happen when using credit. Remember that gadget you bought because you could buy it on credit, and you're still paying for it even though you never used it. Like the Muse headband you purchased. Do you really need it? This headband supposedly helps you maintain mind control so that you can chill-out when the going gets tough. I mean really, just stick to debit cards!

I'm not totally against credit cards, they have their place. But that topic (in order to do it justice) requires a blog post of its own. Mmm...perhaps it's a topic I will consider later on. OK, back to the budget.

Pennyhoarder also advices putting 10% of your income into a savings account. However, I would suggest investing...after much research of course. Why? Because today the interest banks pay to keep your money hostage is extremely minimal or zero! If possible, make your money work for you whether investing in precious metals, cryptocurrencies, stocks, retirement plan..etc - though no one knows in today's circumstances if they will ever be able to retire.

Sure, keep enough cash in your account to pay your bills, but other than that today, you're better off burying your dough in your backyard! Who knows what the banks will do in the current economic climate? If the economy gets "crazier" and the bank says you can't have your money (until a certain time) well, you're out of luck.

3. Business Expenses recommends four-key areas where getting your business expenses under control is crucial:

Where you work

Some of us freelancers work from home, others share coworking spaces, some of us have a private external office, or we combine our work space, such as working from home part-time and using a coworking space at other times.

Some coworking spaces have a minimum amount of days per month you are allowed to use which includes a monthly charge. Some allow you to pay on a daily basis whenever you come to the office. Conditions differ depending on the coworking space and the location.

Do you have a planned schedule when working-from-home and going to a shared office space? What are the monthly, daily, or weekly expenses. If you don't calculate properly, you could end up using funds that could be put to better use in another area of your life. Like for example, paying yourself...!!!!

Apps and other tech tools

Depending on your line of work a number of apps and tech tools may be required. If you frequently participate in virtual meetings then you prpbably need a cloud based app like Zoom.

Some apps offer free and paid versions. Paid versions usually offer more features. Other apps like invoicing software, grammar checkers, communication tools, and the like, may be useful to you depending on your work. Don't signup for the paid version first, test the app's free version to get an idea of how it works. Then decide if you need any additional features along with the cost involved.

Health insurance

This is a small disadvantage of freelancing. You're responsible for your own health insurance. Whereas when you're working for a company they basically arrange that for you. However, I do believe some freelance positions offer benefits, but it's not the norm.

A helpful quote about insurance on the Discover website from the CFP® Stephen Hunter at Bridgeworth Financial says: "Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin." So, there you go!

Depending on where you are in the world your health insurance prices will vary. Some organizations like the Freelancers Union in the United States provide freelancers with affordable healthcare. Some European countries have mandatory healthcare but will help you cover the cost depending on your income.

Regardless of your situation, healthcare is definitely something you want to look into. Make sure the coverage provided suits your lifestyle.

4. Keep Rates Current

There's no sense in working for rates you charged two-years ago if those rates are not meeting your needs. One of the golden rules is to "accrue your costs into what you charge for your work."

If you're a graphic designer and require a subscription to a specific app that charges a monthly fee to complete your tasks, take this into account when determining your fee. Don't be shy. If a company can get you to work for less, they'll try it.

Know your worth and stick to it...there are always those who are willing to pay you what you are worth. That's if you believe you're worth it. Additionally, there's no way your freelance career can thrive without re-evaluating your rates quarterly, yearly, or whichever timetable you choose.

There are exceptions. For example, maybe you are offered a freelance position with a promise of increased earnings or healthcare benefits. These are things you might want to consider when discussing your rate.

Even so, take into account the least amount you need to survive. Then determine what you should charge for your talent.

Final Thoughts

Many sites offer good advice; however, a common theme running through most of them refers to saving and planning. I'm "on the fence" about these two suggestions.

First of all, as I mentioned previously in this blog post, you get barely anything i.e. interest for your savings and with the financial situation as it is today, your savings may get confiscated by the bank after it's all said-and-done. I'm not referring to overdrafts, debts, or Right of Offset.

I'm referring to bank bail-ins (research what happened in Cyprus and Austria).

If you're not familiar with bank bail-ins, it's time to do your homework. With bank "bail-outs" the government helps get the bank balance their sheets. Bank bail-ins is when YOUR money is used to help the bank balance their sheets. Of course, it's not as simple as that, but this is why it's important that you check the "bail-in" link for more information.

Keep in mind that as a cash depositor in a bank, you are an unsecured creditor of that bank. The best thing to do with your money that's not set aside for bills, is to invest in tangible assets and keep cash where you can immediately get your hands on it.

As far as planning goes, well, sometimes plans work and sometimes they don't. Don't get me wrong, I'm all for planning...but don't forget about living in the NOW. You can't live anywhere else anyway. So plan, flexible.

The world of freelance is somewhat unpredictable. Don't try to be too exact because you will only make yourself frustrated. Your strength lies in attending to your needs of the moment, staying aware of current financial and job trends...and well, be happy.

You will find additional information about finances from one of my previous blog post:

Disclaimer: I am not a financial adviser. Each person must diligently perform their own research and come to their own conclusions about the best steps to take for their financial needs.

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