If you’re a freelancer or you are your own boss, you may well be one of the many who have a less than regular income. It’s a real upside being able to choose your own working hours, but it’s less relaxing when it comes to the money side of things. Working 9-5 does at least mean you’ll know what you’ll be paid at the end of the month, which makes budgeting nice and easy. If you have an unpredictable income, you can still budget though. Here’s how.
First, identify what your target income needs to be each month.
Make a list of all of the bills you have each month such as rent, electricity bills, transport costs, phone bill etc and make this your primary target. Next list all of your other regular outgoings such as supermarket shops and cinema visits, this is your secondary target. Add the two targets together to get your must-earn number.
Next, look to the excess.
Some months you may surpass this must-earn number easily, but if you know you may have others where you do not, you should save enough on the months with excess income so you can cover the low months. Be prepared for these months by putting most of the money you have over on these months into a savings account ready for the months where your income is less, or when an emergency expense crops up.
If you are also saving up for a holiday or for another big expense, you may want to have a separate account for this. Yes, add to the holiday fund if you can, but always put some money into your main savings account.
The other thing to remember if you freelance is that when work is good you still need to have one eye on the next job. You may have lots of work for the next three months, but what about when those clients have less work in a few months’ time? Always be on the lookout for the next job.