Saving & Budgeting

How to Budget Your Finances as a Freelancer

Discover how you should organise your money if you’re a freelancer or don’t receive a regular fixed income

Woman sat in window of a cafe working, with a smile on her face as she can work anywhere as a freelancer

Working from home and being self-employed is a dream for many people. The idea of being a digital nomad and being able to work from anywhere in the world sounds very glamorous. Like every job, it does have its pitfalls. Some months you’re watching payments flooding in, while others you wonder where all the work has disappeared to. 

There is no doubt about it; freelancing is great for those who don’t want to settle for an eight-hour-a-day job. Most freelancers love their job and the flexibility that comes with it. 

However, with the lack of job security and a sporadic income, you need to stay on top of your finances, which means having a well-planned budget. Here are some tips to keep you on track, so you’re not going to find yourself with a slow work month and no money to pay your bills.

Separate Your Business & Personal Accounts

When you start working as a freelancer, the first thing you need to do is open a separate bank account specifically for your work income. Keeping your accounts separate will help you keep track of how much money is coming in. 

You should also, avoid transferring entire payments from your business to your personal account. Otherwise, you’ve defeated the purpose of the separate accounts. 

Have all of your freelancing payments deposited to your business accounts, and make sure it doesn’t have a credit or debit card. If it does, put that card in a drawer and never take it shopping with you. The temptation to spend your business funds is too great when you can easily access that money.

Save Something From Every Payment You Receive

The key to saving money is to do so with some consistency. How much you save is entirely up to you. So, decide how much you need to pay your living expenses and then decide if you want to save 10%, 25% or whatever amount you are comfortable putting away. 

Remember to remind yourself that this money is for savings and not to spend when you see a new expensive item you want. If you don’t want to save a certain percentage of every payment, simply save whatever you have not spent from each payment you receive. Ideally, you should pay yourself first and then use the rest to cover your expenses. The less money you have in your current account, the less likely you are to overspend.

Track Your Income & Expenses

We all plan the big expenses but tend to ignore the small purchases. The trouble is, those small purchases can add up very quickly, and before you know it, you’ve spent everything you earned on that last project. 

Track your income and your expenses. You can use a spreadsheet or download an app and enter everything you receive and spend, even if it seems insignificant. 

Once you start to track your finances properly, you’ll have a better idea of where your money is going, and once you know this, you’ll be better prepared to avoid unnecessary spending, and you’ll see where you can cut back. 

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