One of the spine-chilling features of a freelancer is an irregular income. As a freelancer, you swim in an overflow of cash this month while the next you ponder on how you’ll cater for the
bills.
Out of this, it becomes practicality for any freelancer to wish if only they could be on a regular paycheck. Opting out can be an option if you have little know-how on how to cope in the freelancing world, especially in matters relating to budgeting.
You need to know the lasting ways on how to sail through the eventualities.
To avoid this, how can you settle the worries of a self-employed you?
Here are five ways how freelancers can budget their earnings.
Increasing of freelance rates
As a freelancer who is starting it can be a hard nut to crack to ask for an increase in prices.
It can be absurd, and approaching a client can be difficult. However, if you have a regular client, you can request for a rate increase, and you can achieve this if you give them excellent content.
The clients you are targeting for a rate increase should get their value for money because you cannot expect them to increase the rates if your work is shoddy. Perfect what you do and let it speak volume on what you can offer.
The other aspect that can make you increase your rates is when your expenses increase because if they grow, you’ll be forced to also increase your rates.
Budgeting of bills in advance
Know your income and expenses.
A freelancer who doesn’t know how to budget their bills in advance is a big fail. It is a recommendation and wise to know how to. How can you do this?
You can use a spreadsheet to know of your fixed bills month’s way before time. Budgeting for essential expenses that are a must is vital to avoid using your hard-earned cash on non-essentials.
Knowing how your months will be is very crucial because it helps you to understand how much you’ll need.
It is essential to note down your regular monthly recurring costs. Not only will it help you to cater for them but you get prepared that no matter what, you will have to provide for the month in, month out.
Listing down of your regular monthly recurring expenses like:
• Working space
• Web hosting fees
• Health insurance
• Cell phone bill
• Publication subscription
It is also vital to:
List the expenses you incur irregularly. Some of the costs incurred happen intermittently, and it is also important to budget for;
• Business license fees
• Entertainment and travel
• Conferences
• Office supplies and business cards
Changing how you spend
As a freelancer, one of the most annoying habits you can work on is to improve on how you use your money. You can achieve this by cutting off unnecessary costs.
Teaming up with friends or fellow freelancers, you may agree to buy goods in bulk once per week as per your agreement to cut down the costs.
By doing this, you reduce the financial stress that may occur in your business. Overspending leaves your pocket hurting, and as a result, you become broke.
It is advisable to be responsible for your finances if at all, there is no one to caution you on how you use your hard-earned cash. Being able to eliminate things that you don’t need; like going out for dinner is very helpful.
Monthly payments for a working space can be expensive, and as a freelancer, you can opt to work from home or a library for free.
Discipline is the key to matters relating to change. It all starts with the mind. Once you see the big picture, changing how you spend cannot be a problem. Whatever you save out of cutting down the non-essentials, you can use it to pay for personal loans.
Paying of taxes
Evading payments of taxes is a crime. Filling your annual tax return can be a major headache in a self-employed profession.
It is always good to note that if you happen to be the last-minute person, you may end paying up more.
Paying of taxes is inevitable. If you miss paying your taxes on time, be assured of paying the penalties. Being responsible enough as a freelancer to file your tax return once the tax year is over, it is
the best thing you can do.
Imagine being penalized for failing to file your returns. What happens? You pay the penalty using the money you had not budgeted for which is not a wise thing to do.
Having a longer-term goal in mind
As a freelancer, you can live a life of hand-to-mouth if you are not careful enough. How can you get out of a feast and famine mindset
You can achieve this by setting up long-term goals which will sustain you when there will be no flow of cash.
Having long-term goals for your income, you can curb this pretty well. Your goal should be to live on 50% of your income, 30% of your flexible expenses, and 20% of your savings. It is doable if you set your mind on it.
Sticking to these proportions, you get the surety of meeting your long-term goals like retirement.
Bottom line
As a freelancer, you know the shortcomings that occur in this journey like earning inconsistently, delay by some clients in paying their invoices and getting a few gigs than expected.
The income keeps on changing each month, and budgeting becomes problematic. It is normal to experience this as a freelancer and being ready to some of these inconsistencies; it will save you a lot of agonies.
How do you handle it? Wallowing in regrets and worries cannot salvage your situation whatsoever.
The best thing you can do is come up with a long-term solution, which you can achieve through budgeting of your income.
Well, take a stand as a freelancer and opt to budget for your income.