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Budgeting for Freelancers

By Reyna Tabbada, Brighterlife.com.ph

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01 Freelance -  Peter Hellberg-smFor freelancers, financial security is a priority. With no fixed monthly income, cash flow is hard to determine. In the absence of an employer, benefits and retirement packages must come from their own pockets. The challenge lies on how to achieve stability amidst an erratic earning scheme, whether for artists, virtual assistants, and other outsourced professions.

Here is where sensible and progressive budgeting can intervene. It puts method into the madness of freelancing, making it sustainable and viable as a career path. Below are some handy budgeting tips for the ultimate freelancer:

1. Secure the basics

The benefits and other mandatories of an employee are a good basis of what a freelancer must secure. Aside from monthly necessities like rent, contribute to government social programs like SSS (Social Security System) and PhilHealth. Build a retirement nest, factor in your taxes, and put up an emergency fund, which is particularly useful for lean months.

2. Project your income

Depending on your field, there are seasons of abundance and drought. In my six years of freelancing, I can identify months when projects pour in. This allows me to compensate and prepare for the dry spell. If you’re just starting, determine how much you earned in a year and divide it by twelve. Use this as a benchmark of your monthly income.

3. Separate and segregate

One strategy I learned is to divide your earnings in two: business and personal. The easiest way to execute this is to open two bank accounts, each serving a different purpose. Business can cover overhead, transportation, and bills. Personal may include your savings and allowance.

4. Use budgeting tools

Some download budgeting apps like Mint for a mobile budgeting tool. Others religiously list down their expenses in a notebook. A few friends employ the envelope method. In an online search, the list of personal finance tools seems endless. Do what complements your lifestyle.

5. Think like an entrepreneur

Personally, I started freelancing because I hate waking up early. When I started encountering roadblocks in my finances and even losing a few clients, I realized that I’m actually an entrepreneur. Freelancers are businessmen, who should be thinking how to grow what they have built. Invest on assets that will make your “company” grow, like learning a new skill or upgrading on technology. Adopt this kind of mind-set and you’ll be more conscious of how you actually dispense with your earnings.


“5 Steps to Budget your Freelance Income”

“6 Best Banking and Budget Apps”

Photo used under Creative Commons from Peter Hellberg.

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