One big mistake freelancers often do is to go without a budget. Sure, every freelancer would like to create one and plan ahead, but many will not know how because they are facing the problems we’ll see in this article.
Freelancing has lots of advantages, unfotunatly a consistent income isn’t one of them. The solution to that issue is actually quite simple: set yourself a minimal income needed to run your business, then try to do a projection of what your regular income will be. Doing a projectsion will of course be easier if you’ve been freelancing for a while.
To find out what your minimal income needed, you should take a look at your past year’s expenses and make a monthly average. This is a good time to also find out some organisational problems and see where you could cut out some spendings. Then you can take you past year’s income to see how much money you expect to get every month.
Work & Life are mixed
This is a big issue for most freelancers, especially the ones working from home. There is no obvious boundaries between your personal and freelancing lives.
To create a budget for your freelance business, you MUST separate working and private spendings. Start by getting two separated bank accounts and dedicated credit cards (if you use credit cards).
You can also have two phones to handle your business and personal matters separatedly, it will help you keep some sanity as well as track the business communication spendings.
You have no salary
At least most freelancers don’t budget a salary for themselves, but they should. Save at the end of month with better income and create a little cushion for yourself, this way you won’t suffer too much during bad months and get your regular income.