I have a confession to make:
I’ve been freelancing full-time for three years, am making more money than ever and I still have problems when it comes to the freelance income roller coaster.
In fact, if there was one thing I’d have to say I don’t like about freelancing is that it’s very difficult to plan with variable income. (On the bright side: I can make whatever kind of money I want and have a bit more control over the amount of work I take on.)
Since I still find myself struggling with the freelance income roller coaster I decided to a) call myself out and b) find some strategies to help. Here are some of the ways you can make freelance income a little more manageable.
Focus on having fixed expenses.
People with a regular paycheck often times have more stable income but unstable expenses. Freelancers are tempted to have both unstable income and unstable expenses.
Well, the buck stops here!
Your first task in dealing with the freelance income roller coaster is to focus on having fixed expenses. That way, you know what you need to make each month and can reverse engineer the process.
Get clear on the numbers.
Clarity is key when it comes to dealing with the freelance income roller coaster. I recently did the math where I figured out my expenses for my business and my personal life. I then threw in taxes for good measure. By getting clear on all these numbers I was able to determine that I need to make at least $7,000 each month.
From there, I ask myself how much I want to put in savings, how much I want to pay myself in a salary and if I can bring down without sacrificing quality. After doing this the number was still $7,000 at which point I start asking myself how I can get to that $7.000 each month.
Prioritize your savings.
If there’s one great thing that’s come from dealing with the freelance income roller coaster it’s that I’ve made saving money a habit. In fact, the first thing I do when I get a windfall of cash is to save it.
This is because I’ve learned the hard way that freelancers should always have some cash on hand. For example, I now have an unexpected $1500 expense I have to deal with, but I’m not stressing about it because I’ve got money in savings.
Make tracking your income and expenses a habit.
I’ve recently mentioned that becoming a freelancer will force you to take a look at your finances. Fortunately, there are tools available out there that help you track your income and expenses with ease.
First, find a tool like Due to help to track business revenue and hours worked. You’ll also want to keep an eye on business expenses.
Second, you’ll also want to track your personal finances with a tool like Mint or Personal Capital. Remember, as a freelancer, you’re dealing with two budgets instead of just one.
By following these tips you’ll be able to better manage the freelance income roller coaster. Just keep in mind that this stuff takes practice and you’ll get better at it with time.