Working as a freelancer has its own set of challenges when it comes to money management. With the added pressure of changing economic times, full-time freelancers face added stress surrounding their income. Understanding how to budget with irregular income is important for those who want to sustain this lifestyle.
With a few simple steps, the uncertainty of self-employment doesn’t have to feel daunting. Let’s look at some basic budgeting tips for the modern freelancer.
Let Technology Help You Budget
With the vast resources available, budgeting can be done easily on almost any smart device. For freelancers, there are a number of budgeting apps that not only help you improve your spending habits, but also help you manage your time better. You’ll need to keep track of your hours and ensure you’re maximizing your efforts. Finding the right app is easier than ever and many offer tailored features for self-sustained workers.
Research Short-Term Options
Working with an irregular income may present some challenges, especially for a freelance worker looking to organize their finances. It’s important to understand all of the options available, the ones in addition to spreadsheets and apps. Alternative lending options, in the form of payday loans at GoDay.ca or through other providers, offer fast and convenient short-term relief. Most lenders require only basic information from the customer for approval, such as their banking details and employment history. Unlike traditional lending options, customers can sidestep the red tape with the help of the right lender.
Prioritize Your Finances
As a freelancer you may be subjected to different tax structures for the self-employed category. For this reason, having these funds set aside is imperative come tax season. Taking care of your essentials is the first step to a solid financial foundation.
A popular tool used is the 50-20-30 rule. This guideline breaks down your spending into three categories — 50 percent for living expenses and essentials, 20 percent towards financial goals, and 30 percent for flexible spending. This can be a helpful tool for freelancers, allowing them to organize their irregular income as well as plan for the future.
Know When You’re Getting Paid
If you’re a seasoned freelancer, you’ve most likely fallen into a pattern with your clients when it comes to payments. Whether you’re receiving your fees at the end of the month, or on a specific date, knowing when your money is coming in will help you understand how long your current money needs to last.
Save For Emergencies
Just like the 50-20-30 method suggests, you should always try and set aside funds for any what-ifs that could occur. Because you’re working with irregular cash flow, having a safety net in place will allow you to take comfort in the uncertainty of your job.
You may not be able to put away the same amount every month, but reducing your spending on non-essentials and instead focusing on your future will keep your finances on track. If your income does fluctuate but your expenses remain, you’ve already done the prep work. You can use what you need while continuing to put the time and focus into your clients.
