5 Best Budgeting Tips for Freelancers

Making your living as a freelancer gives you a lot of freedom, but it can be hard knowing how to manage money as a freelancer. After being used to a regular paycheck, an unstable income can throw you for a loop.  In 5 Best Budgeting Tips for Freelancers, I will walk you through the 5 tips that will help you keep track of your income.

You don’t need to let fear keep you from pursuing your freelance dreams. I’ve rounded up some of the best budget tips for freelancers to help you keep track of your income. Let’s Get Started! 

Top 5 Budget Tips for Freelancers

1. Set Aside Half Your Income

Experienced freelancers say setting aside half your income every month is critical. You’ll need this for an emergency fund, to pay taxes and to pay unexpected business expenses.

Experts commonly cite the so-called 50-30-20 rule.

In an article in Forbes, independent contractor and entrepreneur Abdullahi Muhammed explains that this means living on 50% of your income.

“The other 50% should be divided between flexible expenses and savings at 30% and 20% respectively,” Muhamed writes. “If you can get close to these proportions and stay there, you will be able to meet long-term financial goals – savings for kids’ college and retirement, for example.”

Saving half your income may seem impossible when you’re starting out as a freelancer. If you’re struggling, start small. Saving anything will help you keep your budget from careening out of control.

2. Take Small Steps, But Take Them Now

You should start your financial planning when you start your business. Have a plan to cover your immediate and long-term goals before you start.

At its most basic level, budgeting for freelancers requires the following steps:

  • Write down your immediate and long-term financial goals.
  • Start saving what you can.
  • Use a budgeting app or other simple tracking system.

Maybe you can’t even imagine setting aside half your income right now. Try setting aside 20% or 10%. Start building an emergency fund. Pay down your debt as quickly as possible to free up money for operating expenses and savings.

In an interview with NerdWallet, freelance writer Alysse Dalessandro described using simple steps to get her erratic budget under control.

“I try to be really conscious of where the money is, where it ends up and making sure that I’m putting money aside,” Dalessandro said. “There was a time I was paycheck to paycheck, and that’s freelance paycheck to paycheck, which is scarier.”

Dalessandro started small, setting aside some of her money every month and eventually sticking to the 50-30-20 routinely. She added another budgeting tip for freelancers who want to save for a special purchase:

“In 2016, she saved $1,522 for a trip to Italy using the 52-week challenge. Each week, she put money into a jar. The amount corresponded with the week, so she put $1 in during the first week, $2 during the second week, and so on until week 52. Every dollar came from her spending money.”

3. Keep It Simple5 Best Budgeting Tips for Freelancers

One of the best budget tips for freelancers is to keep it simple.

Many people think they need an all-inclusive, complicated money management system when they go into business for themselves.

These can be expensive to buy and difficult to learn, but are they a necessary business expense? That may not be the case.

Financial experts recommend starting with a simple tracking system that’s easy to use because you’re more likely to stick with it.

Some freelancers use old-fashioned paper ledgers or day planners while others use budgeting apps like Mint, Mvelopes, YNAB (You Need a Budget) or Level Money.

In an interview on the NerdWallet blog, professional financial planner Robert Reed says he’s a fan of simple tracking systems and small steps.

“I’m a big believer in baby steps,” Reed says. “Starting off and setting up some complicated tracking system never works out.”

4. Adopt a Business Mindset

Many freelancers are creative and individualistic. They’re also uncomfortable with strict, regimented schedules and other hallmarks of a regular job. That mindset can help you focus on your passion, but it shouldn’t extend to budgeting for freelancers.

As a freelancer, you are the owner of your own business. You need to manage it like a business.

On the blog 99Designs, freelance graphic designer Tory Van Wey writes, “It’s a bold and respectable life decision to make your living from your art, but it’s not an excuse to shut your eyes and hope your finances sort themselves out. As a freelancer you are also a business owner, and you need to tend to every facet of your business to ensure that it’s a sustainable operation.”

5. Back Up Your Work5 Best Budgeting Tips for Freelancers

You might wonder why backing up your work is a money-saving tip, but think about the times a network failure, power outage or dropped phone call has cost you the ability to earn a living.

As this article from Khan Academy points out, having a backup data plan is just as important as having an emergency fund:

“Speaking of emergencies, few things are worse than trying to meet a deadline, losing your work in the final hour and scrambling to make up for the lost time. Time is valuable, especially if you’re a freelancer, and using it to redo work means you might be missing out on the chance to land other paying gigs. So back up your data frequently using an external hard drive or a cloud-based service.”

It’s easy and inexpensive to back up your data. As a freelancer, you’re responsible for keeping track of all your work.

You Can Do This

If all this seems impossible right now, start where you can.

Whatever you do, don’t put it off. Budgeting for freelancers is harder than budgeting on a regular weekly or monthly income, but the payoff is greater personal freedom. Get your budget under control to experience real financial freedom once your business starts to take off. You’ll already have a system in place for managing all that new money you’ll be making.

“Keeping your finances healthy takes self-control, commitment and consistency,” Muhamed writes in the Forbes article. “If you use the strategies above, you have a much better chance of meeting your budget goals.”

Learning How to Manage Money as a Freelancer Can Set You Free

Financial concerns can keep a lot of people from pursuing their dreams as a business owner, freelancer, or independent contractor. It’s understandable that the idea of going from a predictable, regular income to an unpredictable one can be frightening at first. Learning good financial management can help you feel more confident about setting out on this path.

Something else that can set you free and help you feel more confident is taking a look at my #1 recommendation for escaping the classroom.  It’s a great resource for learning how to promote yourself, your aspirations, and your special concerns.

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Learn How I Successfully Escaped my Classroom

10 thoughts on “5 Best Budgeting Tips for Freelancers”

  1. I love the “Take Small Steps, But Take Them Now” topic. It’s so important to actually take action, rather just just reading about it and knowing “you can do it.” I learned a lot about this stuff years ago, but didn’t take action when I was young, so now I’m kicking myself. These are great points, and not just for Freelancers.

    Reply
    • I’m so glad you enjoyed the article.  I like the small steps idea too.  It is so easy for me to become frozen with inaction because I compare where I’m at with where I want to be and then stress on all the steps involved.  Once I remember to take it one step at a time, everything is good.  That also helps to remind me that getting on the path is the biggest part of the process. 

      Thanks so much for joining the conversation; I appreciate it!

      Reply
  2. Hello my friend Nancy,

    This is Telex from California, How is Virginia treating you ?

    This article on budgeting to me is for everybody not just the freelancers.

    Granted, for someone in such a profession, revenue is not constant hence budgeting is even more 

    critical. However, the habit of saving is so rewarding when one gets into it and becomes second nature.

    Thank you for reminding me as I used to enjoy this practice.

    Reply
    • Hey Telex,

      Life in my part of Virginia is great!  Hope California is bringing you as much joy.  You’re right about the budgeting tips being good for everyone.  I especially liked these five, because they will give the most beneficial results.

      Thanks for joining the conversation; I appreciate it!

      Best,

      Nancy 

      Reply
  3. Hello Nancy, thank you for sharing these 5 budgeting tips for freelancers. This article is very helpful to save us the headache of not having any money to spend when emergencies arise.

    I have big goals for my tomorrow and I need money to actualise them, so I need to cultivate the habit of saving for my goals.

    Reply
    • I’m so glad you enjoyed the article.  It’s a nice feeling knowing someone found the tips helpful.  All the best for your tomorrows!

      Thanks for joining the conversation; I appreciate it!

      Reply
  4. Well, I am the kind of person that has the habit of saving money. I started saving money when I was still a small boy. If I ever need to get something, especially a gadget, I usually save money little by little and I do meet up most of my goals.

    I love the tip you’re sharing right now as I will also have to use them too, no knowledge is lost. I love the way she employed in order to save $1,522 for a trip to Italy. Really nice.

    I want to embark on a business by latest next year February. I have broken down my goals in pieces, and I am achieving them one after the other.

    Best regards!

    Reply
    • How great to hear you’ve been having real success saving for your extras.  I’ve never heard of that particular saving technique, but plane to give it a try December 1st.  That should make paying for Christmas next year a piece of cake!  All the best to you in your new business venture.

      Thanks for joining the conversation; I appreciate it!

      Reply
  5. Oh, how I wish I would have been just as giving to myself as I was growing up and, to this day, as I’ve been to others along the way!

    These are excellent tips! All of them!

    Last year was the first year of my life (I’m level 47 now) that I maintained balances in several savings accounts with the money I make working from home.

    I’ll admit, I was shocked that I finally did it and, had almost forgotten until I got my annual interest statements! I’m not rolling in the dough but, it’s crazy how good it feels!

    Reply
    • I’m so glad the tips look good to you! And, congratulations on those savings accounts. Freelancing is a wonderful thing, but it does have its challenges.

      Thanks for joining the conversation; I appreciate it!

      Reply

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