Budgeting TIps

Working from home, setting your own hours, and being your own boss are perks that freelancers enjoy. They probably sound wonderful to those with a regular day job dreaming of becoming self-employed. However, as a freelancer I can tell you that being a freelancer has drawbacks as well.

For example, you don’t get paid time off for vacations or sick leave. If you are sick and have a deadline you often have to push through it. Otherwise, you must either inform the client you aren’t going to make the deadline, or you have to get help with the job and lose most of your profit.

But the downside of freelancing doesn’t end there. You also don’t get health insurance or  have an employer-sponsored 401K. Taxes must be paid by you, and don’t forget one of the big stressors: your income fluctuates.

If you are thinking about becoming a freelancer and have done any reading about it, you probably already know all of this. What you may not know is why freelancers may need more than one budget during the year.

1. Keep Business and Personal Spending Separate

One of the first and most obvious reasons freelancers may need more than one budget is separation. Simply put, you need to keep your business and personal budgets separate from each other. How else are you going to track them if your expenses are all mixed up?

You might have a tough time figuring everything out come tax time if you are mixing your personal and business expenses. If you don’t have separate accounts and budgets, I feel sorry for whoever is going to do your taxes.

If you are new to freelancing I would suggest you fix this problem with your bookkeeping right away. The longer you wait the harder it will be and more time it will take to correct later.

2. Your Work Load Varies

Any established freelancer knows and understands that their work load varies continually. This means your income, and also your budget, will not be the same from month to month either.

To compensate for the ebb and flow of business, you may need to set aside some of the extra income from higher earning months. Then when business slows, you will still be able to cover your personal expenses without worry.

3. Reason to Have More than one Budget: Work May be Seasonal

Depending on the kind of freelancing you do, you may find some of your work to be seasonal. For instance I have noticed the summer months are a little slower for my freelancing business, and sometimes my income drops during this time of year.

Fortunately, I plan to accommodate these drops in income. I know what I absolutely must earn to pay my bills no matter what. But, I also plan for average months of income, as well as months that are higher by having separate budgets.

I save more during the higher income months and also set aside some money during average income months. Planning for these seasonal changes in income allows me to still be able to pay my bills even when my income drops.

4. Bills and Pay are Irregular

The bills you get throughout any given month come at different times. It might make sense, therefore, to set your budget up according to when the bills come.

In order to make your pay seem regular, let’s say you pay yourself out of your business account every two weeks. You might try matching your bills to each of these paychecks to simplify your budget.

Another advantage of budgeting this way is it forces you to stay on top of your budget. This way, you don’t run out of money before the end of the month and still have bills to pay.


Kayla is passionate about helping people get their finances in order so they can pursue a life of freedom. She quit her job to work for herself with over $148,000 of debt and swears it was the best decision she's ever made!

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